The Effect of State Food Stamp and TANF Policies on Food Stamp Program Participation

The Effect of State Food Stamp and TANF Policies on Food Stamp Program Participation Caroline Ratcliffe Signe-Mary McKernan Kenneth Finegold The Urban Institute 2100 M Street, NW Washington, DC 20037 March 2007 We thank Margaret Andrews, Elizabeth Dagata, Jenny Genser, and David Smallwood for help acquiring the food stamp policy data and for their comments and advice. We also thank Douglas Wissoker and Sheila Zedlewski for their comments and Timothy Dore and William Margrabe for their excellent research assistance. This research was supported by the U.S. Department of Agriculture’s Economic Research Service, Food Assistance and Nutrition Research Program. The views expressed are those of the authors and should not be attributed to the U.S. Department of Agriculture, The Urban Institute, its trustees, or its funders. THE URBAN INSTITUTE 2100 M STREET, N.W. / WASHINGTON D.C. 20037 Table of Contents I. INTRODUCTION............................................................................................................. 1 II. LITERATURE AND CONTRIBUTIONS ................................................................... 3 III. STUDY POPULATION ............................................................................................... 6 IV. DATA ............................................................................................................................. 6 SURVEY OF INCOME AND PROGRAM PARTICIPATION........................................................... 6 FOOD STAMP PROGRAM POLICY VARIABLES...................................................................... 7 WELFARE AND OTHER RELATED POLICY VARIABLES....................................................... 11 ECONOMIC CHARACTERISTICS........................................................................................... 12 V. EMPIRICAL MODEL................................................................................................. 12 VI. RESULTS ....................................................................................................................15 RESULTS: PRIMARY SPECIFICATION.................................................................................. 15 Food Stamp Program Policies ..................................................................................... 15 Welfare and Other Related Policies ............................................................................. 19 RESULT: ALTERNATE SPECIFICATIONS.............................................................................. 20 VII. CONCLUSION .......................................................................................................... 22 VIII. REFERENCES.......................................................................................................... 24 IX. TABLES ........................................................................................................................ 24 X. APPENDIX A: ADDITIONAL DETAILS ABOUT THE SIPP .............................. 37 XI. APPENDIX B: POLICY DATA DOCUMENTATION .......................................... 39 Abstract 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 benefit receipt of the low-income population. We examine a total of 25 specific policies hypothesized to affect FSP participation—15 food stamp policies, seven welfare policies, two minimum-wage variables, and one EITC measure. Our findings are generally consistent with our hypotheses and robust across numerous specifications. 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, but less consistent, evidence that more lenient immigrant eligibility rules, simplified reporting, implementation of the EBT program, and outreach spending increase food stamp receipt. 1 I. Introduction 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, year-round 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).1 In response to the falling participation of the 1990s, many states made