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Welfare Transfers and Intra-Household Trickle Down: A Model with Evidence from the US Food Stamp Program

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  • Robert Breunig
  • Indraneel Dasgupta

Abstract

We examine the case for maintaining welfare and income redistribution programs even when their adverse general equilibrium effects reduce total earnings of poor households. Using a Cournot model of intra-household decision-making, we show that even if welfare cutbacks generate large increases in household income, these may still reduce the well-being of children and elderly dependants. Our model also explains the higher marginal propensity to consume food out of food stamps in the US, compared to that out of market income, noted in earlier empirical studies. We find evidence consistent with our argument in data from a US Food Stamp experiment.

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Bibliographic Info

Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 469.

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Length: 31 pages
Date of creation: Oct 2003
Date of revision:
Handle: RePEc:auu:dpaper:469

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Related research

Keywords: Food Stamp Program; Welfare Transfers; Cash-out Puzzle; Cournot Model; Intra-household Distribution; Engel Curves;

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References

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  1. Dasgupta, Indraneel, 2000. "Women's Employment, Intra-household Bargaining, and Distribution: A Two-Sector Analysis," Oxford Economic Papers, Oxford University Press, vol. 52(4), pages 723-44, October.
  2. Shelly J. Lundberg & Robert A. Pollak & Terence J. Wales, 1997. "Do Husbands and Wives Pool Their Resources? Evidence from the United Kingdom Child Benefit," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 463-480.
  3. Lundberg, S. & Pollak, R.A., 1991. "Separate Spheres Bargaining and the Marriage Market," Working Papers 91-08, University of Washington, Department of Economics.
  4. Robert V. Breunig & Indraneel Dasgupta, 2002. "A Theoretical and Empirical Evaluation of the Functiona Forms Used to Estimate the Food Expenditure Equation of Food Stamp Recipients: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 1156-1160.
  5. Leslie, Joanne, 1988. "Women's work and child nutrition in the Third World," World Development, Elsevier, vol. 16(11), pages 1341-1362, November.
  6. Jim C. Ohls & Thomas M. Fraker & Alberto P. Martini & Michael Ponza, 1992. "The Effects of Cash-Out on Food Use by Food Stamp Program Participants in San Diego," Mathematica Policy Research Reports 1253, Mathematica Policy Research.
  7. Blackorby, Charles & Donaldson, David, 1988. "Cash versus Kind, Self-selection, and Efficient Transfers," American Economic Review, American Economic Association, vol. 78(4), pages 691-700, September.
  8. Dasgupta, Indraneel, 2001. "Gender-biased redistribution and intra-household distribution," European Economic Review, Elsevier, vol. 45(9), pages 1711-1722, October.
  9. Wilde, Parke E. & Ranney, Christine K., 1996. "The Distinct Impact Of Food Stamps On Food Spending," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(01), July.
  10. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  11. Rosenzweig, Mark R., 1986. "Program interventions, intrahousehold distribution and the welfare of individuals: Modelling household behavior," World Development, Elsevier, vol. 14(2), pages 233-243, February.
  12. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1.
  13. Udry, Christopher, 1996. "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1010-46, October.
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