Association for Public Policy Analysis & Management

The Supplemental Nutrition Assistance Program (SNAP) provides food-purchasing assistance to millions of low-income households in the form of monthly benefits redeemable for food at authorized retailers like grocery stores. Previous work suggests SNAP increases food demand, so retailers may respond to an increase in SNAP participation or benefits in various ways. I estimate the impacts of SNAP participation on the decisions of food and non-food retailers concerning store operation, employment, and payroll. I combine data on SNAP participation, industry-specific retailer outcomes, and state changes in SNAP policy over time. To address the endogeneity of SNAP participation, I employ a novel simulated eligibility instrumental variables framework exploiting variation in state policy generosity. Higher SNAP participation leads firms to operate more stores in industries where SNAP benefits are typically accepted. This response is primarily attributable to grocery stores, supermarkets, and convenience stores. Responses are strongest for smaller retail establishments and stores in high-poverty areas. These findings suggest that SNAP makes it feasible for firms to open new stores or continue operating stores that would otherwise be unprofitable.