A model of welfare competition with evidence from AFDC

Luz Amparo Saavedra

No 99-27, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: In this paper, we test empirically for strategic behaviour among the states using the cash support program Aid to Families with Dependant Children (AFDC). To motivate the empirical work, we adept Wildasin´s [41] model of income redistribution to a model of "interjurisdictional welfare competition." Although welfare competition may be generated from different frameworks, we choose Wildasin´s model to illustrate how welfare benefit interdependence is generated in the context of welfare migration. We estimate a "representative reaction function" for AFDC using both cross-sections and pooled cross-sections data. After controlling for other determinants of AFDC benefit levels and for spatial error autocorrelation, we find evidence showing competition.

Keywords: Welfare; competition (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:5242

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