Food assistance programs and outcomes in the context of welfare reform

Objective. Food assistance programs play an important role in meeting the basic needs of low-income households. We consider how the Food Stamp Program (FSP), labor force participation, and food insecurity status affect outcomes of low-income households under different program designs and economic conditions. Methods. Data from the Survey of Program Dynamics allow estimation of the effects of participation in FSP, labor market participation, and food insecurity on each other. To obtain estimates of behavioral relationships, we apply a simultaneous equation model and make a set of plausible assumptions about identification to implement the instrumental variable estimation. Results. Food insecurity has a positive effect on FSP participation, while labor force participation reduces FSP participation. Furthermore, FSP participation is more responsive to changes in the amount of program benefits than to changes in nonlabor income. Labor force participation has no direct effect on food insecurity; although not statistically significant, the effect of FSP participation on food insecurity is positive. A higher wage rate decreases FSP participation and increases participation in the labor force. Conclusions. The structural approach, which relies on particular identifying assumptions, allows us to explicity examine linkages among food program participation, labor force participation, and well-being, measured in terms of food insecurity. The results provide evidence that among low-income households, program parameters affect FSP participation, but no evidence that the food assistance reduces food insecurity.