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What Determines the Allocation of National Government Grants to the States?

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  • John Joseph Wallis

Abstract

During the New Deal the federal government initiated a policy of massive grants to states for support of social welfare and other programs. Since that time grants have come to be an integral part of the American fiscal system, and scholars have continued to debate whether the allocation of federal grants between the states is motivated primarily by political or social and economic objectives. This paper shows that, during the 1930s, both political and economic effects were important determinants of grant allocation, but that the Congressional factors considered by Anderson and Tollison are not important while the Presidential factors considered by Wright are. When the analysis is extended to the years 1932 to 1982, however, Congressional influences do seem important. On the other hand, the dominant influence on federal grant policy over the larger sample appears to be state government expenditures, while both political and economic influences play a smaller role.

Suggested Citation

  • John Joseph Wallis, 1996. "What Determines the Allocation of National Government Grants to the States?," NBER Historical Working Papers 0090, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberhi:0090
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    References listed on IDEAS

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    1. Wright, Gavin, 1974. "The Political Economy of New Deal Spending: An Econometric Analysis," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 30-38, February.
    2. Wallis, John Joseph, 1984. "The Birth of the Old Federalism: Financing the New Deal, 1932–1940," The Journal of Economic History, Cambridge University Press, vol. 44(1), pages 139-159, March.
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    8. Robert P. Inman, 1988. "Federal Assistance and Local Services in the United States: The Evolution of a New," NBER Chapters, in: Fiscal Federalism: Quantitative Studies, pages 33-78, National Bureau of Economic Research, Inc.
    9. Alston, Lee J & Ferrie, Joseph P, 1993. "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth of the Welfare State," American Economic Review, American Economic Association, vol. 83(4), pages 852-876, September.
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    11. Craig, Steven G & Inman, Robert P, 1982. "Federal Aid and Public Education: An Empirical Look at the New Fiscal Federalism," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 541-552, November.
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    Cited by:

    1. Liang, Che-Yuan, 2008. "Collective Lobbying in Politics: Theory and Empirical Evidence from Sweden," Working Paper Series 2008:2, Uppsala University, Department of Economics.
    2. Johansson, Eva, 1999. "Intergovernmental Grants as a Tactical Instrument: Some Empirical Evidence from Swedish Municipalities," Working Paper Series 1999:10, Uppsala University, Department of Economics.
    3. Jameson Boex, 2003. "The incidence of local government allocations in Tanzania," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0311, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Vincent, Rose Camille & Osei Kwadwo, Victor, 2022. "Spatial interdependence and spillovers of fiscal grants in Benin: Static and dynamic diffusions," World Development, Elsevier, vol. 158(C).
    5. Strömberg, David, 2002. "Optimal Campaigning in Presidential Elections: The Probability of Being Florida," CEPR Discussion Papers 3372, C.E.P.R. Discussion Papers.
    6. Dahlberg, Matz & Johansson, Eva, 2002. "On the Vote-Purchasing Behavior of Incumbent Governments," American Political Science Review, Cambridge University Press, vol. 96(1), pages 27-40, March.
    7. Rhode, Paul W. & Snyder, Jr., James M. & Strumpf, Koleman, 2018. "The arsenal of democracy: Production and politics during WWII," Journal of Public Economics, Elsevier, vol. 166(C), pages 145-161.
    8. Valentino Larcinese & James M. Snyder, Jr. & Cecilia Testa, 2006. "Testing Models Of Distributive Politicsusing Exit Polls To Measure Voterpreferences And Partisanship," STICERD - Political Economy and Public Policy Paper Series 19, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    9. Stephen Ansolabehere & James M. Snyder, 2006. "Party Control of State Government and the Distribution of Public Expenditures," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(4), pages 547-569, December.
    10. Jameson Boex & Jorge Martinez-Vazquez, 2005. "The Determinants of the Incidence of Intergovernmental Grants: A Survey of the International Experience (2005)," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0509, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    11. Stephen Ansolabehere & James M. Snyder & Aaron B. Strauss & Michael M. Ting, 2005. "Voting Weights and Formateur Advantages in the Formation of Coalition Governments," American Journal of Political Science, John Wiley & Sons, vol. 49(3), pages 550-563, July.
    12. David T. Mitchell & Danny R. Hughes & Noel D. Campbell, 2014. "Are Powerful Majorities Inefficient for Parties and Efficient for Taxpayers?," Public Finance Review, , vol. 42(1), pages 117-138, January.
    13. Bryan Caplan, 2001. "Has Leviathan Been Bound? A Theory of Imperfectly Constrained Government with Evidence from the States," Southern Economic Journal, John Wiley & Sons, vol. 67(4), pages 825-847, April.
    14. Alejandro Esteller-More, 2003. "The Politics of Tax Administration: Evidence from Spain," Public Economics 0303004, University Library of Munich, Germany.
    15. Noel D. Campbell & R. Zachary Finney & David T. Mitchell, 2007. "Hunting the Whale: More Evidence on State Government Leviathans," Southern Economic Journal, John Wiley & Sons, vol. 74(2), pages 566-580, October.

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    More about this item

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-

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