The Long Run Effects of Access to the Safety Net
A long-run perspective of these programs might change our accounting of their costs and benefits.
by Marianne Bitler | August 29, 2019
Much of the discussion of effects of safety net programs naturally focuses on the short run costs and benefits of program exposure. For example, the food stamp program, which provides low-income families with benefits on an EBT card which can be redeemed for unprepared foods, has been shown to both reduce food insecurity (a benefit, Ratcliffe et al., 2011) and to reduce labor supply (a cost, Hoynes and Schanzenbach, 2012). However, an emerging literature on the US and Europe has begun to find long run positive impacts of these programs which change the accounting of costs and benefits. In particular, Hoynes and Schanzenbach (2016) found evidence that access to Food Stamps led to better health and more self-sufficiency among a sample of adults who grew up in disadvantaged households.
In my new work with Theodore Figinski, we leverage the same variation they used combined with administrative data on nearly 1 million adults’ earnings and use of disability benefits for those born from 1955 through 1980. Our data are panel data on earnings, use of the Social Security Disability Insurance Program, and for individuals with contact with SSDI, their participation in the means tested Supplemental Security Program. Individuals are linked to the presence of the Food Stamp program in their county of birth (from data SSA maintains when individuals apply for a Social Security card). We also control for county and year of birth fixed effects, and in some specifications, spending on other Federal programs, county population, and various trends. Previous work has shown that during the rollout period when Food Stamps was not an entitlement but had limited funding, the timing of adoption is quasi-random. We also build on previous work by finding new data on a program that was in many counties before Food Stamps, the Commodity Distribution Program, which shipped shelf-stable food stuffs to counties and distributed them to welfare recipients and other income eligible persons.
Findings
First, we find that exposure to the Food Stamp program from conception through age 5 is associated with about a 3 percent increase in earnings for women at age 32, with similar magnitudes for other nearby ages. This finding is robust to adding a variety of controls for other welfare programs and for controlling for county population and various types of trends. There is no effect however on our measure of working (having any earnings in a year) either at these ages or at any point an individual is in the panel. Effects on men’s earnings are mixed and inconsistent. Next, we look at the probability individuals earnings are above thresholds like $5000, $10000, etc. in real 2015 dollars. Again, for women we find the program has positive effects at every threshold but is only significant for earnings around $35,000. Finally, we explore effects on both SSI and SSDI involvement. The program has no effect of SSDI use, but for women is associated with a reduction in simultaneous use of SSI and SSDI, suggesting additional savings. To give a sense of the magnitude of these effects, we note that in the 1980 CPS ASEC, nearly 20% of children are living in a household with someone on the Food Stamp program, and that average benefits in 1975 were about half the size of average food spending for food at home.
Second, we document that most of the counties had the Commodity Distribution Program (CDP) in place before they adopted food stamps. For the about 90% of counties with the CDP, rollout of Food Stamps was quick and participation quickly converged to a constant rate. The other counties were slower to ramp up their Food Stamp programs. Further, the bulk of counties with CDP had about the same number of people on the Food Stamp program as had been on the earlier program around the time of the transition. While if the CDP were an effective program, then one would expect effects of switching to Food Stamps from CDP to be smaller than effects overall, we find the opposite. Anecdotal evidence from Congressional hearings suggests that in fact the CDP program was inconsistently run across locations with many opportunities for waste. However, the presence of the CDP program in counties meant that counties had an existing infrastructure in place for evaluating eligibility for CDP which could be repurposed quickly for use in assessing eligibility for food stamps. And evidence from state CDP plans describing how they run the programs suggest most states with both programs in place harmonized CDP eligibility rules with those for Food Stamps. This may have allowed the program to ramp up quickly.
Marianne Bitler is a professor of economics at the University of California, Davis and a research associate at the NBER. Her new work with Theodore Figinski on the long-run effects of food assistance published this month to the ESSPRI working papers series.
References
Ratcliffe C, McKernan SM, Zhang S. 2011. How much does the Supplemental Nutrition Assistance Program reduce food insecurity? American Journal of Agricultural Economics 93:1082–1098.
Hoynes HW, Schanzenbach DW. 2012. Work incentives and the Food Stamp Program. Journal of Public Economics 96:151–162.
Hoynes HW, Schanzenbach DW, Almond D. 2016. Long run impacts of childhood access to the safety net. American Economic Review 106:903–934
