Is the Social Safety Net a Long-Term Investment? Large-Scale Evidence from the Food Stamps Program

Martha J. Bailey, Hilary W. Hoynes, Maya Rossin-Slater, Reed Walker

NBER Working Paper No. 26942
Issued in April 2020
NBER Program(s):Children, Labor Studies, Public Economics

We use novel, large-scale data on 43 million Americans from the 2000 Census and the 2001 to 2013 American Communities Survey linked to the Social Security Administration’s NUMIDENT to study how a policy-driven increase in economic resources for families affects children’s long-term outcomes. Using variation from the county-level roll-out of the Food Stamps program between 1961 and 1975, we find that children with access to greater economic resources before age five experience an increase of 6 percent of a standard deviation in their adult human capital, 3 percent of a standard deviation in their adult economic self-sufficiency, 8 percent of a standard deviation in the quality of their adult neighborhoods, 0.4 percentage-point increase in longevity, and a 0.5 percentage-point decrease in likelihood of being incarcerated. Based on these estimates, we conclude that Food Stamps’ transfer of resources to families is a highly cost-effective investment into young children, yielding a marginal value of public funds of approximately 56.

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Document Object Identifier (DOI): 10.3386/w26942

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