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Food Stamp Entrepreneurs

By: Gareth Olds
  • Format:Print
  • | Language:English
  • | Pages:37
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Abstract

This paper explores how eligibility for the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamps Program) affects firm formation. Using a variety of identification strategies, I show that expanded SNAP eligibility in the mid-2000s increased enrollment by 3–5 percentage points. Newly eligible households were also 20% more likely to own a business, with larger effects for incorporated firms. I find large increases in labor supply on the extensive and intensive margins, equivalent to 1.1 million additional workers. I also develop a series of falsification checks that use information from unaffected portions of the income distribution to improve RD estimates. This strategy improves balance on observables between treatment and control groups, and Monte Carlo simulations find a significant reduction in Type 1 Error. Finally, I show that the empirical results are driven entirely by newly eligible households that did not enroll, suggesting uninsured risk from leaving wage employment is the primary barrier to entrepreneurship for this population.

Keywords

Entrepreneurship; Welfare or Wellbeing

Citation

Olds, Gareth. "Food Stamp Entrepreneurs." Harvard Business School Working Paper, No. 16-143, June 2016.

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