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Working
Paper Series:
07.11
Consumption Reponses to In-Kind Transfers:
Evidence from the Introduction of the Food Stamp Program
Hilary W. Hoynes and Diane Whitmore Schanzenbach
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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