Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282579 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16452
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
consumption smoothing
permanent income hypothesis
SNAP
government shutdown
JEL: 
D12
I3
I38
Document Type: 
Working Paper

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