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Do Small States Get More Federal Monies? Myth and Reality about the US Senate Malapportionment

  • Valentino Larcinese

    (London School of Economics and STICERD)

  • Leonzio Rizzo

    (University of Ferrara and Catholic University, Milan)

  • Cecilia Testa

    ()

    (Department of Economics, Royal Holloway, University of London)

We analyze the relationship between senate malapportionment and the allocation of the US federal budget to the states during the period 1978-2002. A substantial literature originating from the influential paper by Atlas et al (1995, using a within estimation methodology finds that small and overrepresented states get significantly larger shares of federal funds. Revisiting the econometric specification used by the current empirical research, we show that the number of senators percapita is inappropriate to capture malapportionement in regressions using broad federal programs, and that the results obtained with this indicator are extremely non-robust to reasonable specification changes. In particular, senators percapita have a significant impact on federal spending only in regressions containing state fixed effects. Furthermore, the coefficients estimated using the within methodology are statistically different across states and, therefore, cannot be used to assess spending differentials between states. The magnitude and significance of those coefficients suggest a within state-specific inverse relationship between broad spending categories and population which is not systematically related to the size of the states and seems more compatible with incrementalist theories of budget allocation.

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Paper provided by Department of Economics, Royal Holloway University of London in its series Royal Holloway, University of London: Discussion Papers in Economics with number 07/01.

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Date of creation: May 2007
Date of revision: May 2007
Handle: RePEc:hol:holodi:0701
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  1. Wallis, John Joseph, 1998. "The Political Economy of New Deal Spending Revisited, Again: With and without Nevada," Explorations in Economic History, Elsevier, vol. 35(2), pages 140-170, April.
  2. Moffitt, Robert, 1990. "Has State Redistribution Policy Grown More Conservative?," National Tax Journal, National Tax Association, vol. 43(2), pages 123-42, June.
  3. Atlas, Cary M, et al, 1995. "Slicing the Federal Government Net Spending Pie: Who Wins, Who Loses, and Why," American Economic Review, American Economic Association, vol. 85(3), pages 624-29, June.
  4. Valentino Larcinese & Leonzio Rizzo & Cecilia Testa, 2005. "Allocating the US federal budget to the states: the impact of the President," LSE Research Online Documents on Economics 3611, London School of Economics and Political Science, LSE Library.
  5. Hauk, William R. & Wacziarg, Romain, 2007. "Small States, Big Pork," Quarterly Journal of Political Science, now publishers, vol. 2(1), pages 95-106, March.
  6. Brian Knight, 2004. "Legislative Representation, Bargaining Power, and the Distribution of Federal Funds: Evidence from the U.S. Senate," NBER Working Papers 10385, National Bureau of Economic Research, Inc.
  7. 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.
  8. Robert A. Moffitt, 2003. "Means-Tested Transfer Programs in the United States," NBER Books, National Bureau of Economic Research, Inc, number moff03-1, August.
  9. Gary Hoover & Paul Pecorino, 2005. "The Political Determinants of Federal Expenditure at the State Level," Public Choice, Springer, vol. 123(1), pages 95-113, April.
  10. Brian Knight, 2005. "Estimating the Value of Proposal Power," American Economic Review, American Economic Association, vol. 95(5), pages 1639-1652, December.
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