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A model of welfare competition with evidence from AFDC

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  • Saavedra, Luz Amparo
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    Abstract

    In this paper, we test empirically for strategic behaviour among the states using the cash support program Aid to Families with Dependant Children (AFDC). To motivate the empirical work, we adept Wildasin´s [41] model of income redistribution to a model of "interjurisdictional welfare competition." Although welfare competition may be generated from different frameworks, we choose Wildasin´s model to illustrate how welfare benefit interdependence is generated in the context of welfare migration. We estimate a "representative reaction function" for AFDC using both cross-sections and pooled cross-sections data. After controlling for other determinants of AFDC benefit levels and for spatial error autocorrelation, we find evidence showing competition. --

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    Bibliographic Info

    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 99-27.

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    Date of creation: 1999
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    Handle: RePEc:zbw:zewdip:5242

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    Keywords: Welfare competition;

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    Cited by:
    1. Matthieu Leprince & Sonia Paty & Emmanuelle Reulier, 2005. "Choix d'imposition et interactions spatiales entre collectivités locales. Un test sur les départements français," Recherches économiques de Louvain, De Boeck Université, vol. 71(1), pages 67-93.
    2. 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.
    3. Sole Olle, Albert, 2003. "Electoral accountability and tax mimicking: the effects of electoral margins, coalition government, and ideology," European Journal of Political Economy, Elsevier, vol. 19(4), pages 685-713, November.
    4. Forslid, Rikard & Andersson, Fredrik, 1999. "Tax Competition and Economic Geography," Research Papers in Economics 2000:5, Stockholm University, Department of Economics.
    5. Sylvie Charlot & Sonia Paty, 2010. "Do Agglomeration Forces Strengthen Tax Interactions?," Urban Studies, Urban Studies Journal Limited, vol. 47(5), pages 1099-1116, May.

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