Government Shutdown and SNAP Disbursements: Effects on Household Expenditures

Mindy Marks, Silvia Prina () and Roy Gernhardt ()
Additional contact information
Silvia Prina: Northeastern University
Roy Gernhardt: Northeastern University

No 16452, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We test the ability of SNAP eligible households to smooth consumption when facing unexpected transitory income shocks stemming from the 2018-19 government shutdown. In response to the shutdown, all states were federally mandated to pay February SNAP benefits on or before January 20th. This created a short-term windfall (two payments very close to each other) followed by a longer than normal gap during which no SNAP disbursements were received. We show that expenditures are lower in the month where benefits where advanced vis-à-vis months with unaltered benefits schedules. We complement this finding by exploiting preexisting state-level differences in disbursement schedules that drove some states to temporarily alter the timing of the 2019 March and April SNAP disbursements. These diff-in-diff results show that households in treated states reduced spending when there was a longer than usual gap between SNAP disbursements. Our findings are inconsistent with the permanent income hypothesis.

Keywords: consumption smoothing; permanent income hypothesis; SNAP; government shutdown (search for similar items in EconPapers)
JEL-codes: D12 I3 I38 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2023-09
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Journal Article: Government shutdown and SNAP disbursements: effects on household expenditures (2025)
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