Relationship between the EITC and Food Stamp Program Participation Among Households with Children

Research Report

Relationship between the EITC and Food Stamp Program Participation Among Households with Children

Abstract

The federal Earned Income Tax Credit (EITC) and the Food Stamp program (FSP) are the largest means-tested transfer programs for low-income working parents in the United States. This study examines how these two programs interact, particularly the potential impact of the EITC on participation in the FSP during the latter half of the 1990s. Although EITC payments do not reduce the potential size of a household's food stamp allotment under FSP rules, EITC adds to a household's resources and thus could affect a household's willingness to participate in the FSP. The paper tests this hypothesis with monthly data from the Survey of Income and Program Participation for 1996 through 1999. Although the findings are mixed, there is evidence of a negative impact of EITC on FSP participation.

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