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Farm Poverty and Safety Nets
by Craig Gundersen (Iowa State University) and
Susan Offutt (Economic Research Service, U.S. Department of
Agriculture)
Executive Summary
Fifty years ago,
almost half of all farm families in the United States were poor. Out
of concern for these high levels of poverty, the federal government
established a series of farm safety net programs as part of the New
Deal. These programs distributed benefits based on the volume of
commodity produced by the farmers.
Today, farm poverty
rates are at their lowest level in the Nation’s history. There are
fewer farm families than there were in 1930, while the well being of
these farm families, on average, has improved significantly.
Nevertheless, approximately one in ten farm households in any year
have incomes below the poverty line. While a subset of these
low-income farm families have benefited from farm safety programs,
larger farms receive most of the payments from safety net programs.
For example, 20% of the poorest farmers receive support payments,
while about 75% of the most well-off farmers receive farm payments.
While the farm safety net programs may not benefit low-income
farmers, other safety net programs designed for the general
population may still provide this support.
To investigate the use of other
safety net programs by farmers, Gundersen and Offutt pursued two
main questions in this paper. First, in comparison to the general
population, what is the participate by low-income farmers use two of
the largest safety net programs in the United States – the Food
Stamp Program and Medicaid? Second, what would happen to the number
of farmers eligible for general safety net programs if farm support
payments were eliminated? To answer these questions, the authors
use data from the 1989-2004 Current Population Survey (CPS).
The results of their
study show that low-income farmers are much less likely than the
general low-income eligible population to use food stamps and
Medicaid. Farmers may be unwilling to participate in these programs
because of factors such as the stigma sometime associated with using
these programs and the transactions costs incurred when applying for
and recertifying eligibility. If a goal of policymakers is to
increase participation in these programs among farmers, the results
indicate that one approach may be to ensure the employment
commitments of farmers not interfere with their ability to apply for
food stamp and Medicaid benefits.
In terms of their
second question, results also show that if the farm safety net were
eliminated, there would be an increase in the number of farm
households eligible for food stamps but, in the absence of
behavioral changes, this would only lead to small increases in the
number of recipients. This potential increase in the number of
eligible households implies that the need for policies to address
the low participation rates of farmers would be relevant for a wider
group of farm households.
Food Stamp Benefits and Child Poverty
By Dean Jolliffe, Craig Gundersen, Laura Tiehen,
and Joshua Winicki
Executive Summary
The Food Stamp Program is the
largest U.S. food assistance program, serving approximately 17.2
million individuals in 2000 with an annual benefit distribution of
$15 billion, or approximately $73 in monthly benefits per person.
Between 1998 and 2000, 47% of all food stamp program participants
were children, and in 2000 approximately 57% of food stamp
households include children. There are many studies on the
effectiveness of the Food Stamp Program (FSP) in achieving the
direct goal of raising the nutritional well-being of low income
households. Relatively less work has assessed the effectiveness of
food stamps as a policy instrument to promote the general welfare of
the population.
To investigate the role of food
stamps in alleviating child poverty, Jolliffe, Gundersen, Tiehen,
and Winicki first examine child poverty to bring focus to an
important sub-population that has much higher rates of poverty than
the general population. Second, they consider the effect of food
stamps on measures that reflect the depth and severity of poverty
rather than just the incidence of poverty. This extension is
particularly relevant since the value of food stamp benefits
declines as a household’s income increases. Third they examine the
potential influence of changes in the Food Stamp Program on poverty.
To understand the effect of food
stamps on poverty, the authors examine how supplementing income with
food stamps affects the headcount, poverty gap, and squared poverty
gap indices. The headcount is simply the proportion of persons
living in poverty, or the incidence of poverty. The poverty gap
index measures the depth of poverty and is defined by the mean
distance below the poverty line. The third measure is the squared
poverty gap index, which provides a measure of the severity of
poverty. The authors use data from the March Supplement of the
Current Population Survey (CPS).
The results of their study first
verify the well-known result that the incidence of child poverty is
much greater than the incidence of poverty for the population in
general. They extend the current understanding of child poverty by
showing that the depth and severity of child poverty, indicated by
the poverty gap and squared poverty gap indices, are also
significantly higher than for the population in general. Second,
results indicated that the incidence of child poverty, as measure by
the headcount index, is not reduced much by adding the value of food
stamps to household income. In contrast, the depth and severity of
child poverty are significantly reduced by the Food Stamp Program.
The average decline from 1988 to 2000 in the child poverty gap index
was 20%, while the average decline in the squared poverty gap index
for children was 28%. These results demonstrate that an
examination of only the headcount index would lead to the incorrect
conclusion that food stamps do not have an important impact on the
reduction of child poverty. Their analysis makes clear that the Food
Stamp Program plays an important role in improving the welfare of
children in low-income households.
The authors consider several
potential changes to the Food Stamp Program and simulate their
effect on child poverty. First, results indicate than in increase in
benefit levels by 10% and 20% would not result in a large reduction
of child poverty. Second, when benefit levels are increased to the
poor and extreme-poor households with children, the authors find
that this potential change would be very effective in further
reducing the depth and severity of child poverty. The last
simulation provides food stamps to poor and extreme-poor households
with children who were not receiving stamps. Results indicate that
this sort of increase in participation rates does not necessarily
result in greater reduction in child poverty rates. The
simulation that increases benefits to all poor household that
already participate in the Food Stamp Program reduced the depth of
poverty by a greater amount than the simulated increase in
participation rates.
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