Incomplete program take-up during a crisis: evidence from the COVID-19 shock in one U.S. state.

ABSTRACT

In the U.S., means-tested cash, in-kind assistance, and social insurance are part of a patchwork safety net, often run with substantial involvement of state and local governments. Take-up-participation among eligible persons in this system is incomplete. A large literature points to both neo-classical and behavioral science explanations for low take-up. In this paper, we explore the response of the safety net to COVID-19 using newly-collected survey data from one U.S. state-Utah. The rich Utah data ask about income and demographics as well as use of three social safety net programs which collectively provided a large share of relief spending the Unemployment Insurance program, a social insurance program providing workers who lose their jobs with payments; the Supplemental Nutrition Assistance Program, which provides benefit cards for purchasing unprepared food at retailers; and Economic Impact Payments, which provided relatively universal relief payments to individuals. The data do not suffice to determine eligibility for all of the programs, so we focus on participation per capita. These data also collect information on several measures of hardship and why individuals did not receive any of the 3 programs. We test for explanations that differentiate need, lack of information, transaction costs/administrative burden, stigma, and lack of eligibility. We use measures of hardship to assess targeting. We find that lack of knowledge as well as difficulty applying, and stigma in the UI program each play a role as reasons for not participating in the programs.