Reassessing the "Race to the Bottom" in State Welfare Policy (ICPSR 1294)
On the assumption that poor people migrate to obtain better welfare benefits, the magnet hypothesis predicts that a state's poverty rate increases when its welfare benefit rises faster than benefits in surrounding states. The benefit competition hypothesis proposes that states lower welfare benefits to avoid attracting the poor from neighboring states. Previous investigations, which yield support for these propositions, suffer from weaknesses in model specification and methodology. We correct these deficiencies in a simultaneous equation model including a state's poverty rate and its benefit level for AFDC (Aid to Families with Dependent Children) as endogenous variables. We estimate the model using pooled annual data for the American states from 1960 to 1990, and find that a state's poverty rate does not jump significantly when its welfare payments outpace benefits in neighboring states. Neither is there any evidence of vigorous benefit competition among states. States respond to decreases in neighboring states.
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Berry, William D., Richard C. Fording, and Russell L. Hanson. Reassessing the "Race to the Bottom" in State Welfare Policy. ICPSR01294-v1. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2004-02-24. http://doi.org/10.3886/ICPSR01294.v1
Persistent URL: http://doi.org/10.3886/ICPSR01294.v1
This study was funded by:
- National Science Foundation
Scope of Study
Geographic Coverage: United States
(1) The files submitted are read_me_first.pdf (documentation for the replication dataset), BFH_JOP.dta (a Stata 8.0 dataset containing all data necessary to replicate the results reported in the article), and BFH_JOP_unpublished_supplement.pdf, an unpublished supplement described in the text of the article. (2) These data are part of ICPSR's Publication-Related Archive and are distributed exactly as they arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigator(s) if further information is desired.
Original ICPSR Release: 2004-02-24
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