Why do small states receive more federal money? Us senate representation and the allocation of federal budget
In this paper we provide new evidence on the importance of the so-called small state advantage for the allocation of the US federal budget. We also provide a new interpretation of the available empirical evidence. Analyzing outlays for the period 1978-2002, we show that not only does the population size of a state matter, but so too does its dynamics. Once population scale and change effects are separated, the impact of population size is substantially reduced, and population change turns out to be an important explanatory variable of current spending patterns. The impact of scale and change effects varies substantially across spending programs. Small states enjoy an advantage in defense spending, whereas fast growing ones are penalized in grants allocations. Our results imply that the interests of the states are not easily aligned around their population size alone. The distortion associated with population dynamics is concentrated on federal grants where formulas play a substantial role in limiting budgetary adjustments. Hence, a large part of the inverse relationship between spending and population appears to be driven by mechanisms of budgetary inertia which are compatible with incrementalist theories of budget allocation.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: Carrer del Tinent Coronel Valenzuela 1-11, 08034 Barcelona|
Phone: 93 403 46 46
Fax: 93 403 98 32
Web page: http://www.ieb.ub.edu
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
- Alesina, Alberto & Wacziarg, Romain, 1998.
"Openness, country size and government,"
Journal of Public Economics,
Elsevier, vol. 69(3), pages 305-321, September.
- Tiberiu Dragu & Jonathan Rodden, 2010. "Representation and regional redistribution in federations," Working Papers 2010/16, Institut d'Economia de Barcelona (IEB).
- Hauk, William R. & Wacziarg, Romain, 2007. "Small States, Big Pork," Quarterly Journal of Political Science, now publishers, vol. 2(1), pages 95-106, March.
- 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.
- 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.
- Brian Knight, 2005. "Estimating the Value of Proposal Power," American Economic Review, American Economic Association, vol. 95(5), pages 1639-1652, December.
- Fleck, Robert K., 2001. "Population, Land, Economic Conditions, and the Allocation of New Deal Spending," Explorations in Economic History, Elsevier, vol. 38(2), pages 296-304, April.
- 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.
- Valentino Larcinese & Leonzio Rizzo & Cecilia Testa, 2005.
"Allocating the US Federal Budget to the States: the Impact of the President,"
STICERD - Political Economy and Public Policy Paper Series
03, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- 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.
- Brian Knight, 2008. "Legislative Representation, Bargaining Power and The Distribution of Federal Funds: Evidence From The Us Congress," Economic Journal, Royal Economic Society, vol. 118(532), pages 1785-1803, October.
- 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.
- 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.
- Wallis, John, 2001. "The Political Economy of New Deal Spending, Yet Again: A Reply to Fleck," Explorations in Economic History, Elsevier, vol. 38(2), pages 305-314, April.
When requesting a correction, please mention this item's handle: RePEc:ieb:wpaper:2010/10/doc2010-46. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.