The Relationship Between Low-Skilled Unemployment Rates and SNAP Participation

Abstract

The Supplemental Nutrition Assistance Program (SNAP) is designed to operate counter-cyclically, with participation rising as the economy contracts and declining as the economy expands. The growth in the costs of and participation in SNAP in recent years has raised political concerns over whether the program serves people who truly need assistance. Policymakers have also questioned how well the program responds to the unmet needs of disadvantaged groups. Using state-year panel data, this study employs a fixed effects specification to test the sensitivity of SNAP participation to the state-level unemployment rates of low-skilled individuals. The analysis shows a statistically significant, positive, yet reasonably small correlation between SNAP participation and the unemployment rates of the low-skilled population. The results also indicate that the relationship between SNAP participation and low-skilled unemployment becomes stronger as unemployment rises and that much of the take-up of benefits lags behind unemployment. These findings largely confirm the counter-cyclical nature of the program and suggest the need for caution among policymakers in reaching conclusions about the utility of the program, as its response to economic conditions is not necessarily immediate.