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American Federalism, Welfare Policy, and Residential Choices

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  • Peterson, Paul E.
  • Rom, Mark

Abstract

The relationship between welfare benefit levels and the residential choices of the poor raises two issues for federalism in the United States. Do state benefit levels affect the residential choices of the poor? Do residential choices of the poor affect the level at which a state sets its benefit levels? Empirical studies have seldom studied the interconnection between these two issues. This research estimates simultaneously the mutual effects of welfare benefits and poverty rates while controlling for other economic and political variables. When benefit levels become high, the size of the poverty population increases. Conversely, when poverty rates become high, benefit levels are cut. The findings are consistent with the claim that state-determined benefit levels distort policy and residential choices.

Suggested Citation

  • Peterson, Paul E. & Rom, Mark, 1989. "American Federalism, Welfare Policy, and Residential Choices," American Political Science Review, Cambridge University Press, vol. 83(3), pages 711-728, September.
    • Handle: RePEc:cup:apsrev:v:83:y:1989:i:03:p:711-728_08
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    1. repec:ken:wpaper:0502 is not listed on IDEAS
    2. Phillip B. Levine & David J. Zimmerman, 1999. "An empirical analysis of the welfare magnet debate using the NLSY," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(3), pages 391-409.
    3. P. B. Levine & D. J. Zimmerman, "undated". "The intergenerational correlation in AFDC participation: Welfare trap or poverty trap?," Institute for Research on Poverty Discussion Papers 1100-96, University of Wisconsin Institute for Research on Poverty.
    4. Jon H. Fiva, 2007. "Does Welfare Policy Affect Residential Choices? Evidence from a Natural Experiment," Discussion Papers 503, Statistics Norway, Research Department.
    5. Dierk Herzer & Rainer Klump, 2010. "Poverty and government transfers in the United States," Applied Economics Letters, Taylor & Francis Journals, vol. 17(16), pages 1565-1569.
    6. Glaeser, E. L., 1998. "Should transfer payments be indexed to local price levels?," Regional Science and Urban Economics, Elsevier, vol. 28(1), pages 1-20, January.
    7. Jason L. Saving, 2017. "Why Haven’t Regional Wages Converged?," Working Papers 1711, Federal Reserve Bank of Dallas.
    8. Fiva, Jon H., 2009. "Does welfare policy affect residential choices? An empirical investigation accounting for policy endogeneity," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 529-540, April.
    9. Saving, Jason L., 1999. "Migration, labor-leisure choice, and Pareto suboptimal redistribution," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 559-573, September.
    10. Jeffrey Clemens & Stan Veuger, 2023. "Intergovernmental Grants and Policy Competition: Concepts, Institutions, and Evidence," NBER Chapters, in: Policy Responses to Tax Competition, National Bureau of Economic Research, Inc.
    11. Luis Ayala & Elena Bárcena-Martín & Jorge Martínez-Vázquez, 2022. "Devolution in the U.S. Welfare Reform: Divergence and Degradation in State Benefits," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(3), pages 701-726, September.
    12. Marcia K. Meyers & Janet C. Gornick & Laura R. Peck, 2001. "Packaging Support for Low-Income Families: Policy Variation across the United States," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(3), pages 457-483.
    13. Jan K. Brueckner, 2000. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, John Wiley & Sons, vol. 66(3), pages 505-525, January.
    14. Berthold, Norbert & Fricke, Holger & Kullas, Matthias, 2005. "Standortwettbewerb der Bundesländer," Discussion Paper Series 80, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    15. Kauffman, Kyle D. & Kiesling, L. Lynne, 1997. "Was there a nineteenth century welfare magnet in the United States?: Preliminary results from New York City and Brooklyn," The Quarterly Review of Economics and Finance, Elsevier, vol. 37(2), pages 439-448.
    16. Bruce D. Meyer, 1998. "Do the Poor Move to Receive Higher Welfare Benefits?," JCPR Working Papers 58, Northwestern University/University of Chicago Joint Center for Poverty Research.
    17. Berthold, Norbert & Fricke, Holger, 2003. "Deutschland im Herbst 2003 - blockierter Standortwettbewerb der Bundesländer," Discussion Paper Series 69, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    18. Smith, Mark W, 1999. "Should we expect a race to the bottom in welfare benefits? Evidence from a multistate panel, 1979-1995," MPRA Paper 10125, University Library of Munich, Germany.

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