Effects of Unconditional Cash Transfers on Safety Net Program’s Participation Among Low-Income Families

Background/Purpose: Unconditional cash transfers are being promoted as tools to alleviate poverty and thus improve child and family well-being. Extensive research links higher household income to improved child development and maternal well-being, yet concerns persist that unconditioned income may reduce low-income family’s participation in the labor market and existing social safety net programs. While labor market responses have been studied, far less is known about benefit participation. Economic theory suggests additional income may lower the marginal value of public benefits, particularly when participation involves substantial administrative burdens. These burdens are disproportionately experienced by marginalized populations, especially Black and Hispanic communities. Despite growing interest in unconditional cash transfer policies, evidence on how unconditional cash affects public benefit participation remains limited and mixed. This study examines whether unconditional cash transfers alter participation in Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) for families with young children, and whether effects differ by race and ethnicity.

Methods: We use data from Baby’s First Years (BFY), a randomized controlled trial providing unconditional monthly cash gifts to 1,000 mothers of newborns in low-income households across four U.S. metropolitan areas. Participants were randomly assigned to receive either a high cash gift ($333 per month) or a low cash gift ($20 per month). Importantly, these transfers were not counted as income for public benefit eligibility, allowing isolation of behavioral responses from mechanical eligibility effects. BFY survey data are linked to state administrative records on SNAP and TANF participation through children’s first three years of life. The analytic sample includes 695 mothers who consented to administrative data linkages and remained in states providing administrative data. Outcomes measures include total benefit amounts, any receipt, months of receipt, and benefit interruptions. Intent-to-treat effects are estimated using regressions with baseline covariates and site fixed effects, with sensitivity analyses using attrition-adjusted weights and multiple imputation to handle attrition. Racial and ethnic heterogeneity is examined.

Results: Overall rates of participation in SNAP were high, whereas participation in TANF was low. Across the full sample, we find no statistically significant differences between high- and low-cash gift groups in SNAP or TANF participation with respect to benefit level, duration, or stability over the first three years following childbirth. These findings suggest that unconditional cash transfers do not, on average, reduce engagement with existing safety net programs. However, patterns differ by race. Among Black participants, higher cash gifts are associated with increased SNAP participation at age two and consistent reductions in TANF receipt (both total amounts and months of receipt). No comparable patterns are observed among Hispanic participants.

Conclusions and Implications: Among low-income families, unconditional cash transfers do not broadly crowd out participation in SNAP or TANF, alleviating concerns that behavioral responses substantially erode household resources. Nonetheless, subgroup differences suggest unconditional cash may interact with administratively burdensome programs, particularly TANF, in racially patterned ways. These findings highlight the importance of administrative burden and program design when evaluating cash transfer programs and their implications for family economic security and child well-being.