Volume 38, Supplement 2003
Gundersen, Craig, and James P. Ziliak. 2003. "The Role of Food Stamps in Consumption Stabilization." Journal of Human Resources 38(4):1051-1079.
Although the Food Stamp Program is the largest universal entitlement program in the social safety net, little is known about its stabilizing role in household income and consumption. Using data from the Panel Study of Income Dynamics spanning 1980-99, we estimate the volatility of income with and without food stamps coupled with a variance decomposition of consumption. Among families at high ex ante risk of food stamp participation food stamps reduced income volatility by about 12 percent and food-consumption volatility by about 14 percent. There was, however, a marked decline in consumption-smoothing benefits of the program in the early 1990s relative to the 1980s.
Craig Gundersen is an associate professor at Iowa State University; James
P. Ziliak is the Carol Martin Gatton Chair in Microeconomics at the University
of Kentucky. An earlier version of this paper was presented at the IRP/ERS
conference on "Income Volatility and Implications for Food Assistance Programs,"
and the 2003 Allied Social Science Meetings. We owe a special thanks to our
discussants, Bill Gale and Jim Ohls, for many helpful comments. In addition we
wish to thank two referees, Julie Cullen, Laura Tiehen, Josh Winicki, and
conference participants for their comments. Financial support for Ziliak under
cooperative research agreement #43-3AEM-8-80112 from the U.S. Department of
Agriculture, Economic Research Service is gratefully acknowledged. The opinions
expressed herein are solely those of the authors and should not be construed in
whole or in part to any branch of the federal government. All errors are our
own. The data used in this article can be obtained beginning May 2004 through
April 2007 from James P. Ziliak at Department of Economics, Gatton College of
Business & Economics, University of Kentucky, Lexington, KY 40506-0034. E-mail:
jziliak@uky.edu .
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X