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Title: The Spillover Effects of State Spending

Citation Type: Journal Article

Publication Year: 2005

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Abstract: This paper estimates the degree to which state spending is influenced by the spending of neighboring states. Focusing on mandated increases in welfare spending, I find that each dollar of state spending causes spending in neighboring states to increase by 37 to 88 cents. I use more plausibly exogenous variation than previous studies to abstract from the endogeneity of neighbors' spending, and show that previous estimates may have been biased. I also explore the strength of several different measures of neighborliness. The most predictive measure is the degree of population mobility between states, suggesting that concerns about migration may drive the interdependence of state spending policy.

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Authors: Baicker, Katherine

Periodical (Full): Journal of Public Economics

Issue: 2

Volume: 89

Pages: 529-544

Data Collections: IPUMS CPS

Topics: Other, Poverty and Welfare

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