The Great Recession and social welfare spending in the American States

Abstract

A major question of political economy is why and under what conditions welfare state expansion and retrenchment takes place. We examine the impact of the Great Recession of 2008–2009 on welfare policies of the American states. The analysis examines social policy spending in the American States for periods ranging from 1982 to 2011. The results suggest that social welfare spending is higher with better economic conditions in general but also with higher poverty rates. Liberal citizens and governments and Democratic majorities in the state house produce higher welfare spending. There is a trade-off between education and social welfare spending. Controlling for political, social, and economic conditions that affect state welfare policy, the years of the Great Recession saw a contraction of spending on social welfare programs in general and Temporary Assistance to Needy Families in particular, but an expansion of support for Medicaid.