School Food Policy Affects Everyone: Retail Responses to the National School Lunch Program
We study the private market response to the National School Lunch Program, documenting economically meaningful spillovers to non-recipients. We focus on the Community Eligibility Provision (CEP), an expansion of the lunch program under the 2010 Healthy, Hunger-Free Kids Act. Under the CEP, participating schools offer free lunch to all students. We leverage both the staggered roll-out and eligibility criterion for the CEP, which is limited to schools where at least 40% of students participate in other means-tested welfare programs. We find that local adoption of the CEP causes households with children to reduce their grocery purchases, leading to a 10% decline in grocery sales at large retail chains. Retailers respond with chain-level price adjustments: chains with the most exposure lower prices by 2.5% across all outlets in the years following adoption, so that the program's welfare benefits propagate spatially. Using a stylized model of grocery demand, we estimate that, by 2016, the indirect benefit had reduced grocery costs for the median household by approximately 4.5%.
We would like to thank Lin Fan, Erik James, and Megan Taylor for excellent research assistance and participants at the AREUEA, ASSA-Industrial Organization Society, National Tax Association, NBER Urban Economics Summer Institute, UC Berkeley Opportunity Lab, and Urban Economics Association conferences and the Atlanta Fed, McGill, INRAE, UBC, UC Irvine, and Yale Economics for helpful comments, especially discussants Justin Gallagher, Justine Hastings, Xavier Jaravel, and Adam Kapor. This work is supported by the Robert King Steel Faculty Fellowship at the University of Chicago Booth School of Business and the Research Sponsor's Program of the Zell/Lurie Real Estate Center. Researcher(s) own analyses calculated (or derived) based in part on data from Nielsen Consumer LLC and marketing databases provided through the NielsenIQ Datasets at the Kilts Center for Marketing Data Center at The University of Chicago Booth School of Business. Researcher(s) own analyses calculated (or derived) based in part on data from Nielsen Consumer LLC and marketing databases provided through the NielsenIQ Datasets at the Kilts Center for Marketing Data Center at The University of Chicago Booth School of Business. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
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