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Games the States Don't Play: Welfare Benefits and the Theory of Fiscal Federalism

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Shroder, Mark

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Abstract

Fiscal federalism theory predicts that states will behave strategically in welfare programs because voter demand for welfare is sensitive to tax price, while the tax price itself changes because of welfare-induced migration. This paper tests these propositions on AFDC in the United States for a panel from 1982-88 using new models for the determination of the recipiency ratio (the tax price) and composite neighbors. The data do not support any substantial tax price elasticity of demand for welfare. Estimates of migration effects on tax price are found to be sensitive to specification. Copyright 1995 by MIT Press.

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Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 77 (1995)
Issue (Month): 1 (February)
Pages: 183-91
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Handle: RePEc:tpr:restat:v:77:y:1995:i:1:p:183-91

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  1. Harry H. Kelejian & Ingmar R. Prucha, 1999. "On the Asymptotic Distribution of the Moran I Test Statistic with Applications," Electronic Working Papers 99-002, University of Maryland, Department of Economics. [Downloadable!]
  2. Revelli Federico, 2002. "Neighborhood effects in social service provision. Competition or reflection?," Department of Economics Working Papers 200206, University of Turin. [Downloadable!]
  3. R. A. Moffitt, . "Explaining Welfare Reform: Public Choice and the Labor Market," Institute for Research on Poverty Discussion Papers 1195-99, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
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  4. Redoano, Michela, 2003. "Fiscal Interactions Among European Countries," The Warwick Economics Research Paper Series (TWERPS) 680, University of Warwick, Department of Economics. [Downloadable!]
  5. D. N. Figlio & V. W. Kolpin & W. E. Reid, . "Asymmetric Policy Interaction among Subnational Governments: Do States Play Welfare Games?," Institute for Research on Poverty Discussion Papers 1154-98, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  6. Luz Amparo Saavedra, . "Do Local Governments Engage in Strategic Property- Tax competition?," Borradores de Economia 139, Banco de la Republica de Colombia. [Downloadable!]
  7. Harry H. Kelejian & Ingmar R. Prucha, 2008. "Specification and Estimation of Spatial Autoregressive Models with Autoregressive and Heteroskedastic Disturbances," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  8. Jan K. Brueckner & Luz A. Saavedra, 2000. "Do Local Governments Engage in Strategic Property-Tax Competition?," Econometric Society World Congress 2000 Contributed Papers 0357, Econometric Society. [Downloadable!]
  9. Harald Badinger & Peter Egger, 2009. "Estimation of Higher-Order Spatial Autoregressive Panel Data Error Component Models," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  10. Irani Arraiz & David M. Drukker & Harry H. Kelejian & Ingmar R. Prucha, 2008. "A Spatial Cliff-Ord-type Model with Heteroskedastic Innovations: Small and Large Sample Results," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  11. Seija Parviainen, 1998. "Redistribution and Risk Sharing in EMU," Discussion Papers 159, Government Institute for Economic Research Finland (VATT). [Downloadable!]
  12. Michela Redoano, 2007. "Fiscal Interactions Among European Countries. Does the EU Matter?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  13. J. P. Ziliak & D. N. Figlio & E. E. Davis & L. S. Connolly, . "Accounting for the Decline in AFDC Caseloads: Welfare Reform or Economic Growth?," Institute for Research on Poverty Discussion Papers 1151-97, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  14. Harald Badinger & Peter Egger, 2008. "GM Estimation of Higher-Order Spatial Autoregressive Processes in Cross-Section Models with Heteroskedastic Disturbances," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  15. Bordignon, Massimo & Cerniglia, Floriana & Revelli, Federico, 2002. "In Search for Yardstick Competition: Property Tax Rates and Electoral Behavior in Italian Cities," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  16. Jason L. Saving, 2000. "The effect of welfare reform and technological change on unemployment," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q2, pages 26-34. [Downloadable!]
  17. Aurélie Cassette & Sonia Paty, 2006. "La concurrence fiscale entre communes est-elle plus intense en milieu urbain qu’en milieu rural ?," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 78, pages 5-30. [Downloadable!]
  18. Luz Amparo Saavedra, 2000. "Do Local Governments Engage In Strategic Property- Tax Competition," BORRADORES DE ECONOMIA 002378, BANCO DE LA REPÚBLICA. [Downloadable!]
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