Linkages among welfare, food assistance programmes and labour supply: evidence from the survey of programme dynamics

At the centre of the debate on welfare reform is whether incentives-based systems help poor families move out of poverty into jobs. Recent data from the first Survey of Programme Dynamics longitudinal and the 1998 experimental data files allow evaluation of the interaction among the Food Stamp Programme (FSP), Temporary Assistance for Needy Families (TANF) programme and labour force participation under different programme design and economic conditions. A model that incorporates jointly determined programmes participation and work decisions is applied to a sample of working age, lower income and asset households. Participation in TANF increases the probability of FSP participation and decreases the probability of being in the work force; working decreases the probability of receiving food stamps. Work, TANF, and FSP participation are related, and TANF and FSP participation rates among poor households who are potentially eligible for TANF are sensitive to changes in programme parameters; as expected, labour force participation is affected by the general economic conditions.