The Introduction of the Food Stamp Program: Impacts on Food Consumption and Labor Supply

The food stamp program, serving 24 million persons in 2004 at a cost of $27 billion, is one of the most important income support programs in the United States. Despite this prominence, it has been relatively understudied as it has been difficult for researchers to isolate the causal impact of the Food Stamp Program on food spending, nutritional intake, labor supply and other outcomes. Because the program is national, there is not variation in program parameters (such as stark differences in state benefit levels or eligibility) that are typically exploited by researchers to measure program impacts. In this work, we leverage previously underutilized variation across counties in the date they originally implemented their Food Stamp Program in the 1960s and early 1970s. Using the Panel Study of Income Dynamics, we employ difference-in-difference methods to estimate the impact of program availability on food spending, labor supply and family income. Consistent with theoretical predictions, we find that the introduction of food stamps leads to a decrease in out of pocket food spending, an increase in overall food expenditures, and a decrease (although insignificant) in the propensity to take meals out. The results are quite precisely estimated for total food spending, with less precision in estimating the impacts on out of pocket food costs. We find no evidence of work disincentive impacts in the PSID, which is confirmed with an analysis of the 1960, 1970 and 1980 Census.