IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/2516.html
   My bibliography  Save this paper

Has State Redistribution Policy Grown More Conservative?

Author

Listed:
  • Robert Moffitt

Abstract

It is well-known that real benefits in the major cash transfer program in the U.S. -- the Aid to Families with Dependent Children (AFDC) program -- have fallen drastically over the past twenty years. State legislatures, which set AFDC benefit levels, have failed to increase nominal benefits to keep up with inflation, resulting in a 25 percent decline in real benefits between 1960 and 1984. The most popular explanation for this decline is that state legislatures, reflecting the changing preferences of voters, have grown more conservative in their tastes for redistribution. The evidence presented in this paper is consistent instead with a different explanation, that legislatures have let federally-financed Food Stamps displace state-financed AFDC benefits. A similar displacement of AFDC by Medicaid benefits appears to have occurred. Aside from implying that preferences for redistribution have not in fact changed, the results also show that the total transfer benefit has increased, as should be expected from growing income levels. The findings also imply that neither the Food Stamp program nor, presumably, any other lump-sum transfer provided by Congress is likely to have any effect on the incomes of the poor female-head population. Instead, such programs will merely provide budget relief to the states.

Suggested Citation

  • Robert Moffitt, 1988. "Has State Redistribution Policy Grown More Conservative?," NBER Working Papers 2516, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2516
    Note: PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w2516.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Orr, Larry L, 1976. "Income Transfers as a Public Good: An Application to AFDC," American Economic Review, American Economic Association, vol. 66(3), pages 359-371, June.
    2. repec:cup:apsrev:v:79:y:1985:i:02:p:458-473_22 is not listed on IDEAS
    3. Hausman, Jerry A, 1985. "The Econometrics of Nonlinear Budget Sets," Econometrica, Econometric Society, vol. 53(6), pages 1255-1282, November.
    4. Megdal, Sharon Bernstein, 1987. "The Flypaper Effect Revisited: An Econometric Explanation," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 347-351, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Smith, Mark W., 1999. "The impact of state welfare policies on women's cohabitation," MPRA Paper 19288, University Library of Munich, Germany.
    2. Howard Chernick, 1998. "Fiscal Effects of Block Grants for the Needy: An Interpretation of the Evidence," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(2), pages 205-233, May.
    3. Gundersen, Craig & LeBlanc, Michael & Kuhn, Betsey A., 1999. "The Changing Food Assistance Landscape: The Food Stamp Program in a Post-Welfare Reform Environment," Agricultural Economics Reports 33993, United States Department of Agriculture, Economic Research Service.
    4. Baicker, Katherine, 2001. "Government decision-making and the incidence of federal mandates," Journal of Public Economics, Elsevier, vol. 82(2), pages 147-194, November.
    5. Marton, James & Wildasin, David E., 2007. "State government cash and in-kind benefits: Intergovernmental fiscal transfers and cross-program substitution," Journal of Urban Economics, Elsevier, vol. 61(1), pages 1-20, January.
    6. Moffitt, Robert & Ribar, David & Wilhelm, Mark, 1998. "The decline of welfare benefits in the U.S.: the role of wage inequality," Journal of Public Economics, Elsevier, vol. 68(3), pages 421-452, June.
    7. 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.
    8. Sandra Decker & Frederic Selck, 2012. "The effect of the original introduction of Medicaid on welfare participation and female labor supply," Review of Economics of the Household, Springer, vol. 10(4), pages 541-556, December.
    9. Gold, Steven D., 1996. "Issues Raised By the New Federalism," National Tax Journal, National Tax Association, vol. 49(2), pages 273-87, June.
    10. Katherine Baicker, 2001. "Extensive or Intensive Generosity? The Price and Income Effects of Federal Grants," NBER Working Papers 8384, National Bureau of Economic Research, Inc.
    11. 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.
    12. Betsey A. Kuhn, 1996. "Policy Watch: The Food Stamp Program and Welfare Reform," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 189-198, Spring.
    13. Gold, Steven D., 1996. "Issues Raised by the New Federalism," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(2), pages 273-287, June.
    14. Baker, Michael & Payne, A. Abigail & Smart, Michael, 1999. "An empirical study of matching grants: the 'cap on CAP'," Journal of Public Economics, Elsevier, vol. 72(2), pages 269-288, May.
    15. 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.
    16. 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.
    17. Williamson Hoyne, Hilary, 1997. "Does welfare play any role in female headship decisions?," Journal of Public Economics, Elsevier, vol. 65(2), pages 89-117, August.
    18. Quigley, John M. & Rubinfeld, Daniel L., 1996. "Federalism and Reductions in the Federal Budget," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(2), pages 289-302, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:2516. 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: () or (Joanne Lustig). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.