The political economy of state level welfare benefits

Abstract

Several new relationships ware indicated by this study. First, the percentage of adults with a college degree seems to increase welfare spending. As noted above, this does not necessarily imply that this group is particularly altruistic overall; higher AFDC levels could be encouraged by a politically productive minority in this group. Second, the percentage Black in the population is a better predictor of AFDC levels than is the percentage of Black AFDC recipients. That is, discrimination against Blacks, via lower AFDC levels, is more closely related to the relative size of the Black community than the relative size of the Black welfare population. The results suggest similar discrimination against Hispanics in regard to AFDC levels. The percentage Catholic increases AFDC levels. This does not necessarily imply that Catholics have a higher preference for welfare spending than non-Catholics (although this may be the case). It may reflect the effect of pressure from Catholic interest groups. Since Catholics are the largest religious group in most states, they may be better able to support political pressure groups that demand more generous welfare programs. Union pressures may contribute to higher levels of welfare benefits. This is more likely to be the case when unemployment levels are particularly high. The relative size of the poverty population is not significantly related to benefit levels. The greater cost to taxpayers of increasing benefit levels when the poverty group is large seems to offset the rent-seeking efforts of a larger recipient group. Finally, jurisdiction size play a significant role in determining benefit levels with larger states providing more generous benefits. In general, the results suggest that the influence of rent-seeking recipients is not a dominant factor in explaining AFDC benefit levels. This result is not surprising given the lack of political influence of this particular recipient group. It is likely that rent-seeking behavior is more important among more politically active groups such as social security recipients and public employees. The influence of altruistic motives in affecting aid levels is more subtle than has been suggested in many past studies. Income was not found to be an important, direct determinant of AFDC levels. The presence of altruistic motives coupled with the ability to effectuate these desires politically seems to be the key to explaining this type of transfer.