M-RCBG Associate Working Paper No. 235
The Causal Effect of Welfare Retrenchment: Evidence from Medicaid and SNAP
Aden Barton
2024 Dunlop Undergraduate Thesis Prize Winner
Abstract
This paper represents the first analysis of the welfare and labor supply effects of two recent instances of welfare retrenchment. I examine the ongoing Medicaid Unwinding,
in which millions have been removed from public insurance. In my first research design, I use a novel instrument for Unwinding intensity based on a state’s caseload prioritization. I find that disenrollment increases the likelihood of being on private insurance by 55 percentage points and of being uninsured by 35 percentage points, suggesting a high level of private insurance crowd out. My second research design exploits the policy’s staggered roll-out, and my final approach combines the two analyses, exploiting both variation in treatment intensity and treatment timing. I find that Unwinding reduces the likelihood of enrollees and disenrollees working in the last week by about 5 percentage points, as individuals likely reduced their labor supply to maintain eligibility. My results also indicate that Unwinding increased household financial strain, most conclusively by greatly raising the likelihood individuals delay medical treatment. The second welfare retrenchment I analyze is the reimposition of Supplemental Nutrition Assistance Program work requirements on able-bodied adults without dependents. I find a precisely estimated zero effect of work requirements on a variety of labor supply measures, both at the extensive and intensive margin.