Volume 38, Supplement 2003
Blundell, Richard, and Luigi Pistaferri. 2003. "Income Volatility and Household Consumption: The Impact Food Assistance Programs." Journal of Human Resources 38(S):1032-1050.
The impact of food assistance programs (food stamps) in a period of rising income inequality in the United States is analyzed using 1978-92 PSID data. We assess to what extent food assistance can be viewed as an effective insurance to permanent shocks to income. The results show that the program has a substantial consumption-smoothing effect in the low-income population: The response of food consumption to a permanent income shock is a third lower after accounting for the monetary value of food stamps.
Richard Blundell is a professor of economics at University College
London. Department of Economics, and the Research Director of the Institute for
Fiscal Studies, Luigi Pistaferri is an assistant professor at Stanford
University, Department of Economics, and a research affiliate of the Center for
Economic and Policy Research. This paper is part of the program of research of
the ESRC Centre for the Micro- economic Analysis of Public Policy at IFS. It was
prepared specially for the Joint IRP/ERS Conference on Income Volatility and
Implications for Food Assistance Programs. The authors would like to thank Ian
Preston and the referees for the numerous and useful comments. Financial support
from the ESRC, the Joint Center for Poverty Research/Department of Health and
Human Services, and NSF grant SES- 0214491 is gratefully acknowledged. The
authors take responsibility for all errors. The data used in this article can be
obtained beginning May 2004 through April 2007 from Luigi Pistaferri, Department
of Economics, Stanford University, and Stanford, CA 94305-6072.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X