Federalizing Benefits:The Introduction of Supplemental Security Income and the Size of the Safety Net

Andrew Goodman-Bacon, Lucie Schmidt

NBER Disability Research Center Paper No. NB 18-16
Issued in August 2018

In 1974, Supplemental Security Income federalized the previously state-run cash welfare programs for the aged, blind, and disabled, imposing a national minimum benefit and standardized eligibility criteria. Because of pre-existing variation in generosity, SSI raised benefits more in some states than others, but had no effect on benefits in states that were above its benefit floor. This paper shows that SSI increased the size of disability transfer programs in states with the lowest pre-SSI benefit levels, but shrank non-disability transfer programs such as Aid to Families with Dependent Children and General Assistance. For every four new SSI recipients brought onto the program by benefit increases, three came from other welfare programs. Each dollar of per-capita income transferred through SSI increased total per-capita transfer income by just over 50 cents.

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