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A model of welfare competition with evidence from AFDC

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  • Saavedra, Luz Amparo

Abstract

In this paper, we test empirically for strategic behaviour among the states using the cash support program Aid to Families with Dependant Children (AFDC). To motivate the empirical work, we adept Wildasin´s [41] model of income redistribution to a model of "interjurisdictional welfare competition." Although welfare competition may be generated from different frameworks, we choose Wildasin´s model to illustrate how welfare benefit interdependence is generated in the context of welfare migration. We estimate a "representative reaction function" for AFDC using both cross-sections and pooled cross-sections data. After controlling for other determinants of AFDC benefit levels and for spatial error autocorrelation, we find evidence showing competition.

Suggested Citation

  • Saavedra, Luz Amparo, 1999. "A model of welfare competition with evidence from AFDC," ZEW Discussion Papers 99-27, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5242
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    Cited by:

    1. Matthieu Leprince & Sonia Paty & Emmanuelle Reulier, 2005. "Choix d'imposition et interactions spatiales entre collectivités locales. Un test sur les départements français," Recherches économiques de Louvain, De Boeck Université, vol. 71(1), pages 67-93.
    2. Cassette, Aurélie & Paty, Sonia, 2006. "La concurrence fiscale entre communes est-elle plus intense en milieu urbain qu’en milieu rural ?," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 78.
    3. Fredrik Andersson & Rikard Forslid, 2003. "Tax Competition and Economic Geography," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 279-303, April.
    4. Luis Ayala & Ana Herrero & Jorge Martinez-Vazquez, 2019. "Welfare Benefits in Highly Decentralized Fiscal Systems: Evidence on Interterritorial Mimicking," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1905, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Sylvie Charlot & Sonia Paty, 2010. "Do Agglomeration Forces Strengthen Tax Interactions?," Urban Studies, Urban Studies Journal Limited, vol. 47(5), pages 1099-1116, May.
    6. Sole Olle, Albert, 2003. "Electoral accountability and tax mimicking: the effects of electoral margins, coalition government, and ideology," European Journal of Political Economy, Elsevier, vol. 19(4), pages 685-713, November.

    More about this item

    Keywords

    Welfare competition;

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