Referring back to Exhibit 1, note that the food stamp and cash assistance caseload trends parallel each other more closely than they parallel the unemployment rate. This may mean that, beyond the administrative linkage, both programs are influenced by some underlying pattern in households' assessments of the costs and benefits of participation. This might reflect economic factors, such as perceptions about job opportunities, or non- economic factors. Or perhaps a period of increasing participation in any one program leads to a broader community effect, increasing people's expectations about the likelihood of being able to obtain benefits from other programs. Such speculations are plausible, but not substantiated in empirical research as yet.
Welfare reform is likely to affect food stamp participation patterns.
Apart from the direct legislative changes to the Food Stamp Program, welfare reform seems likely to have indirect effects on food stamp caseloads through changes to cash assistance. Most importantly, welfare reform is expected to reduce cash assistance caseloads, either by moving recipients into employment or by ending benefits as recipients reach time limits. To the extent that families' participation in TANF influences their FSP participation, food stamp caseloads will decline accordingly. This phenomenon is illustrated in Exhibit 4, which is based on data from on-going welfare reform demonstration in Indiana. The exhibit tracks households' rates of receipt of cash assistance and food stamps for about the first two years after they entered the demonstration.