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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. Lara Shore-Sheppard, 1996. "Stemming the Tide? The Effect of Expanding Medicaid Eligibility on Health Insurance Coverage," Working Papers 740, Princeton University, Department of Economics, Industrial Relations Section..
  2. 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.
  3. Janet Currie & Jonathan Gruber, 1996. "Health Insurance Eligibility, Utilization of Medical Care, and Child Health," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 431-466.
  4. 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.
  5. 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.
  6. A. S. Yelowitz, . "The Medicaid notch, labor supply, and welfare participation: Evidence from eligibility expansions," Institute for Research on Poverty Discussion Papers 1084-96, University of Wisconsin Institute for Research on Poverty.
  7. Gruber, J. & Currie, J., 1994. "Saving Babies: The Efficacy and Cost of Recent Expansions of Medicaid Eligibility for Pregnant Women," Working papers 94-11, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. 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.
  9. George J. Borjas, 1994. "Ethnicity, Neighborhoods, and Human Capital Externalities," NBER Working Papers 4912, National Bureau of Economic Research, Inc.
  10. Anne C. Case & Lawrence F. Katz, 1991. "The Company You Keep: The Effects of Family and Neighborhood on Disadvantaged Youths," NBER Working Papers 3705, National Bureau of Economic Research, Inc.
  11. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  12. 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.
  13. Hilary Hoynes, 1993. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation Under AFDC-UP," NBER Working Papers 4407, National Bureau of Economic Research, Inc.
  14. George J. Borjas & Lynette Hilton, 1996. "Immigration and the Welfare State: Immigrant Participation in Means-Tested Entitlement Programs," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 575-604.
  15. David M. Cutler & Jonathan Gruber, 1996. "Does Public Insurance Crowd out Private Insurance?," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 391-430.
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