The Effects of Food Stamps on Exiting Welfare and Becoming Employed for Welfare Recipients

Welfare reform’s success encouraging employment may be affected by the federal Food Stamp program because many households receive welfare and Food Stamps. Food Stamp benefits could discourage employment because benefits are reduced proportionally with income; alternatively, it could encourage employment by increasing stability and allowing more resources to be allocated toward employment-related expenses. I examine the effects of Food Stamps on exiting welfare and becoming employed for welfare recipients. Results suggest, if anything, that Food Stamps discourage employment, and such benefits may discourage transitions off welfare, too. If so, then it may be necessary to study the determinants of welfare participation (welfare reform and economic growth) in conjunction with other government-assistance programs