Empirical Analysis of Joint Decisions on Food Stamp Program, Temporary Assistance for Needy Families and Labor Force Participation (An)

The fundamental motivation for this study is the need to better understand the interaction among the Food Stamp Program (FSP), Temporary Assistance for Needy Families (TANF) program and labor force participation under different program design and economic conditions. We use data from the first Survey of Program Dynamics (SPD) longitudinal and the 1998 SPD experimental files. The modeling component consists of estimating equations to predict the probability of particular choices made by households. The households choose the alternative that yields the highest utility. The results show that the TANF program parameters (benefit levels, payments standard, benefit reduction rate, income disregard and citizenship status) do matter. The higher are the benefits, the higher is TANF and FSP participation. TANF participation is positively related to the earned income disregard, and negatively related to the benefit reduction rate; the effects are highly significant. Work, TANF, and FSP participation are significantly related. The results imply that TANF and FSP participation among poor households who are potentially eligible for TANF are sensitive to changes in program parameters and macroeconomic conditions; although labor participation is affected by change in program parameters to some degree, it is most affected (negatively) by the unemployment rate.