IRP Discussion Paper Abstracts - 2017

Notes: Abstracts are plain text. Downloadable papers are in Adobe Acrobat (.pdf) format.
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The Supplemental Nutrition Assistance Program
Michael Wiseman

Full Text: DP 1435-17

Transformation of the Food Stamp Program (FSP) into a near-universal system of food-oriented income support renamed the Supplemental Nutrition Assistance Program (SNAP) was arguably the most significant development in American social policy during the first decade of the new millennium. Three events were the primary drivers of the change: (1) contraction of traditional welfare assistance that followed the 1996 transformation of Aid to Families with Dependent Children into Temporary Assistance for Needy Families; (2) progressive relaxation of federal eligibility requirements for food stamp receipt beginning in 2000; and (3) demand for help generated by the Great Recession (GR) of 2007 to 2009. Even with this metamorphosis, SNAP is only one component of the U.S. "safety net," and attention to the program's interface with other safety net components is essential to overall evaluation and planning for improvement. Material from this paper will appear as chapter 3 in The Middle-Class Safety Net in the Great Recession: Unemployment Insurance and Supplemental Nutrition Assistance Working Together, to be published by the W. E. Upjohn Institute in 2018. The book's object is to use the GR experience to inform both Unemployment Insurance (UI) and SNAP policy development in the future. The intent of this chapter is to provide a comprehensive overview of the SNAP program as operated through the GR that explains structure, reviews consequences, and lays part of the foundation for the book's state-specific analyses and its conclusions.

Firms' Choices of Wage-Setting Protocols in the Presence of Minimum Wages
Christopher Flinn, James Mabli, and Joseph Mullins

Full Text: DP 1434-17

We study the formation of wages in a frictional search market where firms can choose either to bargain with workers or post non-negotiable wage offers. Workers can secure wage increases for themselves by engaging in on-the-job search and either moving to firms that offer higher wages or, when possible, leveraging an outside offer into a higher wage at the current firm. We characterize the optimal wage posting strategy of non-negotiating firms and how this decision is influenced by the presence of renegotiating firms. We quantitatively examine the model's unique implications for efficiency, wage dispersion, and worker welfare by estimating it using data on the wages and employment spells of low-skill workers in the United States. In the estimated steady state of the model, we find that more than 10% of job acceptance decisions made while on the job are socially sub-optimal. We also find that, relative to a benchmark case without renegotiation, the presence of even a small number of these firms increases the wage dispersion attributable to search frictions, deflates wages, and reduces worker welfare. Moving to a general equilibrium setting, we use the estimated model to study the impact of a minimum wage increase on firm bargaining strategies and worker outcomes. Our key finding is that binding minimum wages lead to an increase in the equilibrium fraction of renegotiating firms which, relative to a counterfactual in which this fraction is fixed, significantly dampens the reduction in wage dispersion and gains in worker welfare that can typically be achieved with moderate minimum wage increases. Indeed, the presence of endogenous bargaining strategies reverses the sign of the average welfare effect of a $15 minimum wage from positive to negative.