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State Government Cash and In-kind Benefits: Intergovernmental Fiscal Transfers and Cross-Program Substitution

Author

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  • James Marton

    (Martin School of Public Policy and Administration, University of Kentucky)

  • David E. Wildasin

    () (Martin School of Public Policy and Administration and Department of Economics, University of Kentucky)

Abstract

US states provide both cash and health insurance benefits for the poor, partially financed by fiscal transfers from the Federal government. The 1996 welfare reform drastically reduces Federal support for cash transfers at the margin, lowering the relative price to states of providing benefits to the poor through Medicaid. This paper analyzes the comparative-statics response of state governments to such changes in intergovernmental transfers, showing (in central cases) that they can contribute not only to reductions in state expenditures on cash benefits but to increases in expenditures on Medicaid, whether or not beneficiary populations are mobile among states. Length: 27 pages

Suggested Citation

  • James Marton & David E. Wildasin, 2006. "State Government Cash and In-kind Benefits: Intergovernmental Fiscal Transfers and Cross-Program Substitution," Working Papers 2006-01, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
  • Handle: RePEc:ifr:wpaper:2006-01
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Wildasin, David E., 2007. "Pre–Emption: Federal Statutory Intervention in State Taxation," National Tax Journal, National Tax Association, vol. 60(3), pages 649-662, September.
    2. Christos Kotsogiannis & Robert Schwager, 2006. "Fiscal Equalization and Yardstick Competition," Working Papers 2006-15, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    3. Hikaru Ogawa & David E. Wildasin, 2009. "Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking," American Economic Review, American Economic Association, vol. 99(4), pages 1206-1217, September.
    4. Amegashie, J. Atsu & Ouattara, Bazoumanna & Strobl, Eric, 2007. "Moral Hazard and the Composition of Transfers: Theory with an Application to Foreign Aid," MPRA Paper 3158, University Library of Munich, Germany, revised 06 May 2007.
    5. Robin Boadway & Jean-Francois Tremblay, 2005. "A Theory of Vertical Fiscal Imbalance," Working Papers 2006-04, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    6. James Marton, 2007. "The impact of the introduction of premiums into a SCHIP program," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 26(2), pages 237-255.
    7. Claire de Oliveira, 2009. "Good Health to All: Reducing Health Inequalities among Children in High- and Low-Income Canadian Families," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 288, May.
    8. Craig, Steven G. & Howard, Larry L., 2014. "Is Medicaid crowding out other state government expenditure? Internal financing and cross-program substitution," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 164-178.
    9. J. Amegashie & Bazoumana Ouattara & Eric Strobl, 2013. "Moral hazard and the composition of transfers: theory and evidence from cross-border transfers," Economics of Governance, Springer, vol. 14(3), pages 279-301, August.

    More about this item

    Keywords

    Intergovernmental Transfers; Welfare Reform; Medicaid;

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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