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Title: Welfare Benefits and the Race to the Bottom

Citation Type: Miscellaneous

Publication Year: 2007

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Abstract: Strategic interaction among local governments is a major concern in federal systems. In the case of welfare, lawmakers fear that states may engage in a race to the bottom that results in lower than optimal benefit levels nationwide. A prerequisite for this problem is that interstate differences in welfare do actually induce migration. This paper re-examines that question. I draw on recent literature for modeling migration decisions in order to estimate a conditional logit model. Identification exploits differences in benefit eligibility among families considering the same state. Contributions to the literature include a choice set of all fifty states,an explicit measure of distance and the use of variation due to states differing treatment of family size. I find that welfare benefits do encourage migration, but that the effect is smaller than estimates in previous studies. In fact, analysis of my results suggest that the race to the bottom may not be a serious concern.

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Authors: Dudley, Patrick

Publisher: Duke University

Data Collections: IPUMS USA

Topics: Migration and Immigration, Poverty and Welfare

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