The great recession, public transfers, and material hardship

Economic downturns lead to lost income and increased poverty. Although high unemployment almost certainly also increases material hardship and government transfers likely decrease hardship, the first relationship is not yet documented and the second is poorly understood. This study uses data from the Fragile Families and Child Wellbeing Study to examine the associations of unemployment, government transfers, and material hardship. The Fragile Families study collected the latest wave of data during the Great Recession, the worst recession since the Great Depression. The data provide a unique opportunity to examine how high unemployment affects the well-being of low-income families. This study finds that the unemployment rate is associated with increased overall material hardship, difficulty paying bills, having utilities disconnected, and increased usage of welfare, food stamps, unemployment insurance, and Medicaid. If not for food stamps, food hardship during the Great Recession might have increased by twice the amount actually observed.