The effect of household debt on safety‐net participation

Abstract We examine how participation in the Food Stamp Program (FSP)/Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance to Needy Families (TANF) program responds to changes in state level household debt using administrative, quarterly data from 1999 to 2019. Using dynamic panel models, we find no consistently significant relationship. We argue this fails to capture the systemic structure of the safety‐net and household finances. Using a panel vector autoregression to systemically model this relationship shows TANF is generally unresponsive to a one standard deviation shock to debt innovations, while FSP/SNAP participation responds significantly, substantially, and persistently, rising 10.99% cumulatively over 10 quarters.