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This paper uses monthly SIPP data from 1996 through 2003 and state-level policy data to measure the effects of specific food stamp and welfare policies, as well as the minimum wage and EITC, on the food stamp receipt of the low-income population. We find strong evidence that more lenient vehicle exemption policies, longer recertification periods, and expanded categorical eligibility increase food stamp receipt and that the use of biometric technology reduces food stamp receipt. We also find some evidence that more lenient immigrant eligibility rules, simplified reporting, implementation of the EBT program, and outreach spending increase food stamp receipt.
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Food stamps are an important component of low-income families' monthly resources,
increasing the chance families are able to meet basic needs. Food stamps have been found to
increase by 36 percent the purchasing power of a family of four supported by a full-time, yearround
minimum wage worker (Rosenbaum and Super 2005). The effectiveness of the Food
Stamp Program (FSP), however, depends on the extent to which persons take up the benefits to
which they are entitled. In the mid- to late-1990s, the food stamp participation rate fell sharply,
from 74.8 percent in 1994 to 57.9 percent in 1999 (Barrett and Poikolainen 2006). The
participation rate fell further in 2000 and 2001, but increased in recent years and was 60.5
percent in 2004 (Barrett and Poikolainen 2006).
In response to the falling participation of the 1990s, many states made changes to their Food
Stamp Programs to improve accessibility. While benefits and income limits are set at the federal
level, the Food Stamp Program is state administered, so states had discretion to change some
aspects of their programs, such as the length of recertification periods, the application process,
and outreach spending. During the same period, the federal government increased state
flexibility. During the late 1990s, new options such as simplified reporting for earners and
vehicle exemptions for applicants were made available through administrative actions and
These changes culminated in the Farm Security and Rural Investment Act of 2002 (the Farm
Bill), which provides broader flexibility to states along many dimensions. States, for example,
were given 10 new options designed to improve the delivery of food stamp benefits to eligible
households (Dean and Rosenbaum 2002). Many of these options make the program more
accessible to working families, who are larger shares of FSP eligibles and of FSP participants
now than in the early 1990s (Barrett and Poikolainen 2006; Cunnyngham 2002). Other options
allow states to modify some of the effects of the Personal Responsibility and Work Opportunity
Reconciliation Act (PRWORA) of 1996, which restricted food stamp eligibility for non-citizens
and placed time limits on participation by unemployed Able-Bodied Adults Without Dependents
States have been making changes to their Food Stamp Programs with limited information on
how different policies and rules affect decisions to receive food stamp benefits. Results from
this study provide states with information on the extent to which 15 specific state food stamp
policies (and rules) affect households' food stamp receipt. Our analysis also examines how
Temporary Assistance to Needy Families (TANF) policies (and rules), the minimum wage, and
the Earned Income Tax Credit (EITC) affect food stamp receipt. We consider these non-FSP
programs because food stamp receipt may be influenced by factors beyond state FSP policy.
State TANF policies, for example, can affect food stamp receipt because TANF and food stamp
receipt are often linked administratively and in terms of program rules and populations. We
focus on the working-age population and examine two key research questions:
- To what extent have FSP policies affected food stamp receipt?
- To what extent have TANF, minimum wage, and EITC policies affected food stamp
Individual-level data for this analysis come from the 1996 and 2001 panels of the Survey of
Income and Program Participation (SIPP), providing monthly data from January 1996 through
December 2003 (with the exception of March 2000 through September 2000). Policy data come
from a unique data set we have compiled from a variety of sources including the United States
Department of Agriculture (USDA) Food and Nutrition Service (FNS) National Databank Public
Elements (NDPE), FNS waiver database, FNS State Options Reports, and the Urban Institute's
Welfare Rules Database.
Increases in the flexibility states have to set FSP policies have resulted in variation in FSP
policies across states. It is this variation across states and over time that has allowed researchers
to examine the effect of specific FSP policies on FSP participation and caseloads. This paper
contributes to the growing body of literature in this area in two important ways. First, we
examine a comprehensive set of FSP policies, while most studies examine only a limited set of
FSP policies. If states implement multiple FSP policies that are related, then excluding a
particular policy from the analysis can lead to biased estimates. Our analysis includes a
comprehensive set of 15 FSP policies that fall into five categories—eligibility requirements,
recertification periods and reporting requirements, interactions with other welfare programs,
issuance and outreach, and biometrics (e.g., fingerprint imaging).
Second, we contribute to the literature with an empirical analysis that incorporates detailed
measures of states' TANF policies, as well as state minimum wage and EITC policies. Because
policies aimed at the low-income are often related, a model that includes a fuller set of policy
variables is less likely to have biased estimates that result from omitting important variables. In
addition, including these additional policies in our analysis provides important information on
how these non-FSP policies affect FSP participation. Much of the literature defines welfare
reform as the implementation of any major waiver or TANF (e.g., Hanratty 2006, Danielson and
Klerman 2006). Examining the relationship between specific welfare reform policies and FSP
participation provides a more complete picture because different welfare reform policies (e.g.,
earnings disregards and time limits) can have opposite effects on FSP participation; these
opposite effects can offset one another to create no overall effect. We also estimate models
similar to the literature that include indicators of welfare reform implementation (any major
waiver and TANF) rather than the specific TANF policies.
Results from this study suggest that a number of FSP policies affect households' receipt of
food stamp benefits. Consistent with our hypotheses, we find evidence that more lenient vehicle
exemption rules, restoration of benefits to non-citizens, longer recertification periods, simplified
reporting requirements, expanded categorical eligibility, electronic benefit transfer (EBT)
implementation, and outreach spending increase food stamp receipt. We also find that biometric
procedures (e.g., fingerprint imaging and facial matching) lead to lower food stamp receipt. In
terms of TANF policies, our results suggest that more lenient earnings disregards and higher
benefit levels lead to higher food stamp receipt, while more severe sanction policies lead to
lower food stamp receipt. Finally, we find evidence that increases in the minimum wage and the
EITC reduce food stamp receipt.
Below we begin with a discussion of the relevant literature. This is followed by a
description of the study population and data used for the analysis, including the individual-level
SIPP data, the state-level policy data, and the economic data. Next we present the empirical
model, followed by the results. The last section concludes.
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