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Did recent medicaid reforms cause the caseload explosion in the food stamp program?

  • A. S. Yelowitz

I examine whether changes in Medicaid eligibility for young children can help explain the caseload growth in the Food Stamp program between 1987 and 1995. Medicaid may increase food stamp participation through increased awareness about other welfare benefits. It could also reduce earnings through perverse labor supply incentives, thereby increasing food stamp participation. The Medicaid expansions enacted during the 1980s offer a unique opportunity to examine empirically Medicaid's interaction with the Food Stamp program because they conditioned eligibility on the age of the child. Households with ineligible children (based on the child's age) serve as a control group to isolate Medicaid's effect. They help to eliminate many other plausible explanations for the rise in food stamp participation, including economic fluctuations at the state and national levels. I use the Survey of Income and Program Participation (SIPP) to tackle this question. It shows evidence that expanding Medicaid eligibility increased food stamp participation. The effect is quite modest, however. The expansions explain less than 10 percent of the growth in food stamps, substantially smaller than previous estimates. Moreover, its effect on food stamp participation comes entirely through increased program awareness, rather than from any change in labor supply.

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Paper provided by University of Wisconsin Institute for Research on Poverty in its series Institute for Research on Poverty Discussion Papers with number 1109-96.

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Handle: RePEc:wop:wispod:1109-96
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  1. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  2. David M. Cutler & Jonathan Gruber, 1995. "Does Public Insurance Crowd Out Private Insurance?," NBER Working Papers 5082, National Bureau of Economic Research, Inc.
  3. George J. Borjas & Lynette Hilton, 1995. "Immigration and the Welfare State: Immigrant Participation in Means- Tested Entitlement Programs," NBER Working Papers 5372, National Bureau of Economic Research, Inc.
  4. Borjas, George J, 1995. "Ethnicity, Neighborhoods, and Human-Capital Externalities," American Economic Review, American Economic Association, vol. 85(3), pages 365-90, June.
  5. Rebecca M. Blank, 1989. "The Effect of Medical Need and Medicaid on AFDC Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 54-87.
  6. Shore-Sheppard Lara D., 2008. "Stemming the Tide? The Effect of Expanding Medicaid Eligibility On Health Insurance Coverage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(2), pages 1-35, July.
  7. Janet Currie & Jonathan Gruber, 1994. "Saving Babies: The Efficacy and Cost of Recent Expansions of Medicaid Eligibility for Pregnant Women," NBER Working Papers 4644, National Bureau of Economic Research, Inc.
  8. Hoynes, Hilary Williamson, 1996. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation under AFDC-UP," Econometrica, Econometric Society, vol. 64(2), pages 295-332, March.
  9. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
  10. Aaron Yelowitz, 1995. "The Medicaid Notch, Labor Supply and Welfare Participation: Evidence from Eligibility Expansions," UCLA Economics Working Papers 738, UCLA Department of Economics.
  11. Lara D. Shore-Sheppard, 2005. "Stemming the Tide? The Effect of Expanding Medicaid Eligibility on Health Insurance," NBER Working Papers 11091, National Bureau of Economic Research, Inc.
  12. Case, A.C. & Katz, L.F., 1991. "The Company You Keep: The Effects Of Family And Neighborhood On Disadvantaged Younths," Harvard Institute of Economic Research Working Papers 1555, Harvard - Institute of Economic Research.
  13. Rebecca M. Blank & Patricia Ruggles, 1996. "When Do Women Use Aid to Families with Dependent Children and Food Stamps? The Dynamics of Eligibility Versus Participation," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 57-89.
  14. Janet Currie & Jonathan Gruber, 1995. "Health Insurance Eligibility, Utilization of Medical care, and Child Health," NBER Working Papers 5052, National Bureau of Economic Research, Inc.
  15. Moffitt, Robert & Wolfe, Barbara L, 1992. "The Effect of the Medicaid Program on Welfare Participation and Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 615-26, November.
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