Effect of Redetermination of Safety-net on Financial Distress and Local Crime: Evidence from Indiana

By Sakshi Bhardwaj and Daniel Tabak

This paper investigates the effect of losing welfare benefits on local household financial distress and crime. We estimate this effect using a quasi-experiment in which Indiana outsourced and automated the processing of TANF, food stamps, and Medicaid applications. The welfare automation policy was implemented in three waves prior to its cancellation in 2009, before reaching all counties. Using consumer credit panel data, we explore this variation to find that the Indiana welfare automation program, which reduced enrollment in SNAP and TANF enrollment, significantly increased the number of accounts in collections, collections balances, bankruptcy filings, and decreased credit scores. Using data from the Uniform Crime Reporting series, we find that welfare automation policy has also increased crime, primarily property crimes.

Unpublished paper, 2023.