Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program / Hilary W. Hoynes, Diane Schanzenbach.

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Hoynes, Hilary W

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TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w13025.Publication details: Cambridge, Mass. National Bureau of Economic Research 2007.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: Economists have strong theoretical predictions about how in-kind transfer programs -- such as providing vouchers for food -- impact consumption. Despite the prominence of the theory, there has been little empirical work documenting actual responses to in-kind transfers. In this work, we leverage previously underutilized variation in the date of the county-level original implementation of the 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 evidence of small work disincentive impacts in the PSID, which is confirmed with an analysis of the 1960, 1970 and 1980 Census.

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Previous	nber w13022 The Katrina Effect: Was There a Bright Side to the Evacuation of Greater New Orleans? /	nber w13023 Regionalization, Changes in Home Bias, and the Growth of World Trade /	nber w13024 Regularities /	nber w13025 Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program /	nber w13026 Replication in Economics /	nber w13027 The Reliability of Subjective Well-Being Measures /	nber w13028 The Origins of State Capacity: Property Rights, Taxation, and Politics /	Next

April 2007.

Economists have strong theoretical predictions about how in-kind transfer programs -- such as providing vouchers for food -- impact consumption. Despite the prominence of the theory, there has been little empirical work documenting actual responses to in-kind transfers. In this work, we leverage previously underutilized variation in the date of the county-level original implementation of the 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 evidence of small work disincentive impacts in the PSID, which is confirmed with an analysis of the 1960, 1970 and 1980 Census.