Linkages Among Welfare, Food Assistance Programs and Labor Supply: Evidence from the Survey of Program Dynamics

At the center of the debates on welfare reform is whether the incentives-based systems help poor families move out of poverty into jobs. Recent data from the first Survey of Program Dynamics longitudinal and the 1998 experimental data files allow evaluation of 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. A model that incorporates jointly determined programs 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 significantly related, and TANF and FSP participation rates among poor households who are potentially eligible for TANF are sensitive to changes in program parameters; as expected, labor force participation is affected by the general economic conditions.