Income Distribution Commons^™

The Role Of Food Stamps In Consumption Stabilization, Craig Gundersen, James P. Ziliak

University of Kentucky Center for Poverty Research Discussion Paper Series

The Food Stamp Program provides assistance to households with incomes and assets below fixed thresholds. Although it is the largest entitlement program in the social safety net, little is known about the effect of food stamps on stabilizing fluctuations in household income and consumption. To estimate the volatility of income and the attendant reduction in volatility due to food stamps we use data from the Panel Study of Income Dynamics over 1980-1999 along with a model of income that admits permanent and transitory components as well as random growth rate heterogeneity. We then specify a model relating income changes to …