Abstract
Using county-level data on federal New Deal expenditures on public works and relief and Agricultural Adjustment Administration payments to farmers, this paper empirically examines the New Deal’s impact on inter-county migration from 1930 to 1940. We construct a net-migration measure for each county as the difference between the Census’s reported population change from 1930 to 1940 and the natural increase in population (births minus infant deaths minus non-infant deaths) over the same period. Our empirical approach accounts for both the simultaneity between New Deal allocations and migration and the geographic spillovers that likely resulted when economic activity in one county may have affected the migration decisions of people in neighboring counties. We find that greater spending on relief and public works was associated with significant migration into counties where such money was allocated. The introduction of our modern farm programs under the aegis of the Agricultural Adjustment Administration appears to have contributed to a net out-migration that sped the transition of people out of farming.
Highlights
Migration has long been a central issue in understanding economic development.1 A citizen’s ability to move has important political-economy ramifications
The results suggest that New Deal spending had quite varied effects on net migration
1930s may have been based on prior trends, which could have influenced New Deal spending, we have included a proxy for net migration during the 1920s—the growth rate in population from 1920 to 1930
Summary
Migration has long been a central issue in understanding economic development. A citizen’s ability to move has important political-economy ramifications. Many modern studies that attempt to determine how various public policies affect migration incentives often focus on moves across state lines either because of data limitations or the federal government’s increasingly strong role in social policy over the course of the 20th century has served to reduce the variation in benefits across local jurisdictions. Many ‘‘welfare magnet’’ migration studies miss a significant portion of the migration activity across political boundaries.2 These intrastate political boundaries were important in earlier historical periods when social welfare policies were set more by local jurisdictions than they are today and especially during the 1930s, when the federal government distributed dramatically different amounts of money per capita across states and across counties within states. Federal spending on public works and relief programs contributed to significant net in-migration, accounting for between 5 and 16% of the difference in average net-migration rates between counties with net in-migration and counties with net outmigration. Differences in economic activity across counties, measured by retail sales per capita, explain 10% and possibly more of the differences in net-migration rates for the two types of counties
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