Promoting Economic Security among Low Income Families in the United States: The Effects of Food Stamps on Labor Supply, Income and Poverty

August 2012

Udaya R. Wagle, Western Michigan University

Download '2012-17-NPC-Working-Paper.pdf'.


Abstract

Using a combination of family level micro data and state level macro indicators, this analysis examines roles of the Food Stamps Program (FSP) in promoting economic security during 2004 and 2007 in the United States. To account for endogeneity and self-selection bias likely in models of labor supply, income, and poverty using survey data, panel data models are estimated by instrumenting FSP receipts with TANF receipts at the family level and FSP participation rate at a broader geographic level as instruments. While substantiating the widely recognized work disincentive effects of FSP, results support its income-enhancing effects on one hand and poverty-increasing effects on the other. These seemingly contradictory results affirm that FSP supports are typically inadequate to make a significant dent on economic insecurity of ‘poor’ families even though they help promote economic security among low income but ‘non-poor’ families.



Keywords:
Employment, Unemployment, and the Labor Market, Food Assistance Programs and Food Security, Poverty Trends and Measurement