The Effect of Fragmentation and Second-Order Devolution on Efficacy of Local Public Welfare Policy

Abstract

Following implementation of welfare reform in 1997, twenty states devolved public welfare functions to local governments. Yet, little consensus exists about how effective local public welfare expenditures are at reducing local poverty: local governments can offer policies more responsive to local needs, but may also face a welfare migration effect. I argue that the effectiveness of local public welfare policy at poverty reduction is a function of interjurisdictional and intergovernmental arrangements. Analyzing data from the 1997 to 2007 Census of Governments, I find that the magnitude of the marginal effect of local public welfare expenditures on poverty is smaller in jurisdictionally fragmented regions than in consolidated regions. In addition, the magnitude of the marginal effect of local public welfare spending is greater following implementation of welfare reform in states that devolved authority to the local level than in states that did not.