State Poverty Rates: Do the New Welfare Policies Make a Difference?

This article uses four models to identify the best predictors of state poverty levels and changes in state poverty rates since the implementation of welfare reform. The policy decisions based on the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) by the states are tested along with more traditional variables identified in the literature. Using several measures of state poverty, the analysis finds that those states with the lowest poverty rates are those with the healthiest economies, and the most generous state spending on Temporary Assistance for Needy Families (TANF). States with the highest percentage of their TANF rolls made up of black citizens tend to have the highest rates of poverty. Initial poverty rates are found to be important in that states with higher initial poverty levels are capable of generating a larger reduction in poverty than states with lower initial rates. With the exception of limited evidence on sanctions, none of the PRWORA–based policies were found to have any effect on poverty rates.     

Issue compensation and right‐wing government social spending

It is well‐established that prolonged left‐wing incumbency has a positive long‐term effect on welfare effort in terms of high levels of social spending and reduced levels of economic inequality and poverty. Prolonged left‐wing incumbency also influences the institutional set‐up of welfare states, in particular generating strong support for existing arrangements in countries with large welfare states. The issue ownership literature furthermore shows that the public comes to distrust right‐wing parties as defenders of the welfare state. In countries that have a tradition of left‐wing incumbency it is particularly important for right‐wing governments to compensate for the distrust of the public because of the popularity of the welfare state and strong vested interests. While right‐wing governments on average are negatively associated with social spending, there is a strong positive association between right‐wing government and social spending in traditionally left‐wing countries. It is even the case that right‐wing governments in these countries spend more on social welfare than left‐wing governments. This indicates that right‐wing governments are forced to compensate for the lack of public trust by being even more generous than the left.     

Age‐based self‐interest,intergenerational solidarity and the welfare state: A comparative analysis of older people's attitudes towards public childcare in 12 OECD countries

When faced with the necessity of reforming welfare states in ageing societies, politicians tend to demand more solidarity between generations because they assume that reforms require sacrifices from older people. Political economy models, however, do not investigate such a mechanism of intergenerational solidarity, suggesting that only age‐based self‐interest motivates welfare preferences. Against this backdrop, this article asks: Does the experience of intergenerational solidarity within the family matter for older people's attitudes towards public childcare – a policy area of no personal interest to them? The statistical analysis of a sample with individuals aged 55+ from twelve OECD countries indicates that: intergenerational solidarity matters; its effect on policy preferences is context‐dependent; and influential contexts must – according to the evidence from twelve countries – be sought in all societal spheres, including the political (family spending by the state), the economic (female labour market integration) and the cultural (public opinion towards working mothers). Overall, the findings imply that policy makers need to deal with a far more complex picture of preference formation toward the welfare state than popular stereotypes of ‘greedy geezers’ suggest.     

Globalization,government spending and taxation in the OECD

Abstract. This article assesses the impact of globalization on welfare state effort in the OECD countries. Globalization is defined in terms of total trade, imports from low wage economies, foreign direct investment, and financial market integration. Welfare effort is analyzed in terms both of public spending (and separately on social service provision and income transfer programs) and taxation (effective rates of capital taxation and the ratio of capital to labor and consumption taxes). Year–to–year increases in total trade and international financial openness in the past three decades have been associated with less government spending. In contrast, integration into global markets has not been associated either with reductions in capital tax rates, or with shifts in the burden of taxation from capital to consumption and labor income. Moreover, countries with greater inflows and outflows of foreign direct investment tend to tax capital more heavily.     

Exploring the ‘Something for Nothing’ Syndrome: Confused Citizens or Free Riders? Evidence from Sweden

This article examines the occurrence of political non‐attitudes in Sweden and identifies the population segment possessing a ‘something for nothing’ (SFN) mentality regarding social spending. Sweden – often regarded as epitomizing the advanced welfare state – constitutes an analytically interesting case, providing a useful counterpoint to the predominantly American‐based evidence on the subject. It is argued here that national political institutions fundamentally affect the prevalence – and social base – of the SFN segment. To identify SFN sentiments, two question batteries measuring social spending preferences are used. One battery contains ‘priced’ items emphasizing the cost of public spending, while the other set of ‘unpriced’ items does not explicitly connect increased public spending with increased taxes. The patterning of attitudes across these items is explored in order to determine whether SFN sentiments are common in the Swedish electorate. The observed attitude patterns are then linked to broader sets of attitudes to the welfare state, testing whether the degree of ideological coherence differs fundamentally between the SFN segment and other groups. The analysis then explores the individual‐level determinants associated with different attitude patterns. The overall results show that: SFN sentiments are not dominant among the Swedish citizenry; the quality of the SFN segment's belief system, in terms of ideological coherence, does not represent a deviant case; and the background characteristics associated with SFN sentiments suggest that members of this segment should rather be viewed as free riders in economically vulnerable positions than ignorant and politically confused citizens.     

Fiscal Policy Composition,Public Debt,and Economic Activity

This paper uses a dynamic general equilibrium model i) toinvestigate how changes to different spending and revenue items of the budgetaffect economic activity and public finance; and ii) to evaluate thewelfare costs of alternative fiscal policy maneuvers. The paper shows that,unlike an increase in government purchases of final goods, an increasein public employment and transfers can have a contractionary effect onthe economy in the same way as a rise in tax rates. It also suggests thatfiscal adjustments implemented by cutting spending items increasehouseholds' welfare and are more effective in reducing the primary deficitand public debt than are increases in tax rates.     

“Grabbing Hand” or “Helping Hand”?: Corruption and the Economic Role of the State

This article seeks to disentangle which features of government intervention are linked to corruption and which are not, by distinguishing between the government roles of regulator, entrepreneur, and consumer. It finds that the degree of regulation of private business activity is the strongest predictor of corruption, and that high levels of public spending are related to low levels of corruption. There is no evidence of direct government involvement in production having any bearing on corruption. It is concluded that advanced welfare capitalist systems, which leave business relatively free from interference while intervening strongly in the distribution of wealth and the provision of key services, combine the most “virtuous” features of “big” and “small” government. This suggests that anti‐corruption campaigners should be relaxed about state intervention in the economy in general, but should specifically target corruption‐inducing regulatory systems.     

A distributional theory of government growth

This article presents a closed form solution for time-consistent taxation and public spending in a dynamic game between government and median voter. Extending Meltzer and Richard’s static analysis of government size the article offers a theory of growth of government. At low stages of economic development the median voter, identified as a relatively poor worker, prefers to have no or only small redistributive taxation in order to foster savings. Through this channel he expects improvements of his labor productivity and wage. At higher stages of development, however, when capital is relatively abundant and prospects of further labor productivity gains through capital accumulation are smaller, the incentive to tax and redistribute income rises. Yet, in line with previous work on growth and infrastructure spending the median voter prefers a constant share of productive public spending at all times. Hence, government growth is solely driven by an expanding welfare state.     

Partisan politics,welfare states,and environmental policy outputs in the OECD countries, 1975–2005

Building on the burgeoning literature on the association between the welfare state and the environmental state, this study empirically examines how the politics of the former has affected the development of the latter. We suggest that the size of the welfare state shapes the calculus of environmental policy costs by partisan governments. A generous welfare state lowers the costs perceived by the left‐wing government, as large redistributive spending allows the government to mitigate the adverse impact of the new environmental policy on its core supporters, industrial workers. A generous welfare state also implies diminished marginal political returns from additional welfare commitment by the left‐wing government, which lowers the opportunity costs of environmental policy expansion. To the contrary, because of lower overall regulatory and taxation pressure, a small welfare state reduces the costs of environmental policy expansion as perceived by a right‐wing government. Our theoretical narrative is supported in a dynamic panel data analysis of environmental policy outputs in 25 Organisation for Economic Co‐operation and Development member states during the period 1975–2005.     

Social spending,partisan bias and vote choice. Evidence from the US

Most models in political science and political economy assume that benefiting from public spending increases the likelihood of voting for the government. However, we do not have much empirical evidence on the conditions under which recipients of public spending reward governments for their public transfers. This article studies the electoral implications of welfare spending cuts in the early years of the Reagan Presidency, when public spending changes were particularly pronounced. Using 1982 NES data, this paper demonstrates that voters who lost public benefits punished Reagan but this only occurred when they identified with the Democratic Party. By contrast, benefit recipients not affected by government cuts were more likely to support Reagan, but again this was only significant among voters identifying with the party of government. This paper thus finds that governments cannot automatically “buy” votes by using welfare spending, the influence of which is instead cushioned by party identification.     

The Coexistence of Different Welfare Regimes in the Same Country: A Comparative Analysis of the Brazilian Municipalities Heterogeneity

Abstract

This paper demonstrates that heterogeneous countries such as Brazil have vast differences in welfare arrangements at the sub-national level. A number of social policies (social insurance, education, health and social assistance) were analysed in 5,565 Brazilian municipalities along five dimensions: expenditure, coverage, share of private spending, family structure and poverty. The grade of membership method was used to cluster municipalities and identify the main differences in their welfare regimes. Factor analysis was also used to explore which dimensions are most relevant in characterizing these sub-national regimes. The results show highly heterogeneous institutional forms of social protection across municipalities, which are classified as social assistance, quasi-social assistance, corporative, quasi-corporative, family insurance and intermediary welfare regimes.     

Recent Trends in U.S. Income and Expenditure Poverty

After many years of following similar trends, U.S. poverty rates measured by household spending in data from the U.S. Consumer Expenditure Survey (CE) fell between 2000 and 2008, while poverty measured by income rose. Comparisons of spending and income poverty in the CE with income poverty in other surveys, spending data from the Panel Study of Income Dynamics, and a time series of employment levels, find the CE to be the outlier. The findings do not bear directly on the primary use of CE data in providing category weights for calculation of the Consumer Price Index, but do require explanation not available in CE public‐use files.     

The impact of the Second World War on postwar social spending

The huge quantitative literature on postwar social spending almost entirely neglected war as a possible explanatory factor of social spending dynamics. Given the mass carnage and the enormous social needs caused by the Second World War, this is quite astonishing. This article examines for the first time, whether, and in what ways, the Second World War affected cross‐national differences in public social spending of 18 Western welfare states over the course of the Golden Age. Using panel regressions, it is found that the war strongly affected social spending until the late 1960s. The evidence demonstrates that the Second World War is not simply a temporal watershed structuring different phases of welfare state development, but rather a crucial factor for understanding cross‐national differences in welfare efforts and social expenditure dynamics in the postwar period.     

Rental Housing Assistance and Health: Evidence From the Survey of Income and Program Participation

Interest in the health impacts of renter housing assistance has grown in the wake of heated national discussions on health care and social welfare spending. Assistance may improve renters’ health by offering (a) low, fixed housing costs; (b) protection against eviction; and (c) access to better homes and neighborhoods. Using data from the Survey of Income and Program Participation and econometric analysis, I estimate the effect of receiving assistance from the public housing or Section 8 voucher programs on low-income renters’ reported health status and spending. Assisted renters spent less on health care over the year than unassisted low-income renters did, after controlling for other characteristics. This finding suggests that assisted housing leads to health benefits that may reduce low-income renters’ need to purchase health services. Voucher holders’ lower expenditures are influenced by their low, fixed housing costs, but public housing residents’ lower expenditures are not explained by existing theory.     

Public Opinion Polls,Voter Turnout,and Welfare: An Experimental Study

We experimentally study the impact of public opinion poll releases on voter turnout and welfare in a participation game. We find higher overall turnout rates when polls inform the electorate about the levels of support for the candidates than when polls are prohibited. Distinguishing between allied and floating voters, our data show that this increase in turnout is entirely due to floating voters. When polls indicate equal levels of support for the candidates, turnout is high and welfare is low (compared to the situation without polls). In contrast, when polls reveal more unequal levels of support, turnout is lower with than without this information, while the effect of polls on welfare is nonnegative. Finally, many of our results are well predicted by quantal response (logit) equilibrium.     

From myth to reality: Globalisation and public spending in OECD countries revisited

The prevailing but not unchallenged 'conventional wisdom' in the literature dealing with the impact of globalisation on public spending is that the effects of increased openness can be compensated through the welfare state. Repeatedly, studies have found little evidence for a 'race to the bottom' in taxation or spending. This research note shows that it is premature to conclude that globalisation has no negative impact on public spending. By extending the period of observation into the 2000s, by looking at changes in openness and spending instead of their levels, and by disentangling the effects of openness in the cross-sectional and over-time dimensions of variation, this article shows that the association between increased openness and spending is clearly negative. Although the contribution of this research note is mainly empirical, some theoretical arguments are presented, emphasising the long-term nature and complexity of policy making in the politics of globalisation.     

Well-Being in the Welfare State: Level Not Higher, Distribution Not More Equitable

The terms well-being and welfare are Often bracketed together, especially well-being and state welfare. The level of well-being is believed to be higher in welfare states, and its distribution more equitable. This theory is tested here in a comparative study of 41 nations from 1980 to 1990. The size of state welfare is measured by social security expenditures. The well-being of citizens is measured in terms of the degree to which they lead healthy and happy lives. Contrary to expectation, there appears to be no link between the size of the welfare state and the level of well-being within it. In countries with generous social security schemes, people are not healthier or happier than in equally affluent countries where the state is less open-handed. Increases or reductions in social security expenditure are not related to a rise or fall in the level of health and happiness either. There also appears to be no connection between the size of state welfare and equality in well-being among citizens of the state. In countries where social security expenditure is high, the dispersion of health and happiness is not smaller than in equally prosperous countries with less social insurance spending. Again, increases and reductions in social security expenditure are not linked with equality in health and happiness among citizens. This counterintuitive result raises five questions: (1) Is this really true? (2) If so, what could explain this lack of effect? (3) Why is it so difficult to believe this result? (4) How should this information affect social policy? (5) What can we learn from further research?     

Incentives,challenges, and dilemmas of TANF: A case study

This paper compares the incentives inherent in TANF (Temporary Assistance for Needy Families), the U.S. welfare system in place after the 1996 reforms, with those of TANF's predecessor, AFDC (Aid to Families with Dependent Children), using the experience in one state, Wisconsin, as an example. Is the new program successful in avoiding the “poverty trap” of the old welfare system, in which the marginal tax rates imposed on earnings and benefits were so high that they discouraged work effort outside a narrow earnings range? As women receiving assistance begin working more hours and earning more, income‐conditioned benefits (Food Stamps, EITC, Medicaid, and subsidies for child care) are reduced and withdrawn, in effect constituting a “tax” on earnings. Under TANF, there is more support for these families, at least in Wisconsin, and so economic well‐being should be higher for most women with earning in this range than it was under AFDC. But marginal tax rates under TANF remain high, and in some income ranges they are higher than under AFDC. Once in the work force, former TANF recipients have earnings over the long run that expose them to very high marginal tax rates, which decrease the benefits of working harder and make it very difficult to gain full eonomic independence. Evidence from other sources suggest that most low‐skilled women have earnings in the same range and so are likely to face similar reductions in benefits such as child care subsidies or the EITC as their earnings increase, even if they are not receiving welfare‐related benefits. © 2002 by the Association for Public Policy Analysis and Management.     

Marriage patterns among unwed mothers: Before and after PRWORA

The promotion of marriage and two‐parent families became an explicit public policy goal with the passage of the 1996 welfare reform bill. Marriage has the putative effect of reducing welfare dependency among single mothers, but only if they marry men with earnings sufficient to lift them and their children out of poverty. Newly released data from the 2002 cycle of the National Survey of Family Growth (NSFG), along with data from the 1995 cycle, allow us to compare pre‐ and post‐PRWORA differences in (1) cumulative marriage rates among unwed mothers, and (2) patterns of marital choice (that is, differences in characteristics of the men these mothers marry, such as their education and employment status). Overall, our results show that unwed childbearing is associated with lower marriage rates and marital quality. Difference‐in‐difference models show that welfare reform was not strongly associated with pre‐ and post‐welfare reform changes in marriage among nonmarital birth mothers, even among the most disadvantaged mothers. Compared with other women, nonmarital birth mothers also were less likely than other women to marry “economically attractive” men in the post‐welfare reform period. The success of marriage promotion initiatives may depend heavily on whether women themselves are “marriageable” and whether potential spouses have the ability to support a stable family life. © 2008 by the Association for Public Policy Analysis and Management.     

The Federal Role in State Fiscal Stress

This article examines the extent to which the federal government'spolicies were responsible for the fiscal stress experiencedby most state governments in the early 1990s. Federal policieshave contributed considerably to recent state fiscal stress,particularly through the Medicaid program—the fastestgrowing part of state budgets—and the recession, whichdepressed revenue and increased welfare and Medicaid spending.Federal aid reductions have not been an important source ofrecent state fiscal stress. The real value of per capita federalaid other than for welfare programs fell considerably in the1980s, but the reductions were much greater for local governmentsthan for states. The largest reductions were in the early 1980s.Federal policies have affected state finances in several otherways—through tax policy, unfunded mandates, and the federalfailure to cope effectively with problems like health and poverty.Federal court rulings have also caused budget problems (as havestate court decisions). In some respects, state fiscal problemsare not a federal responsibility. Rising school enrollments,new corrections policies, and inelastic tax systems have createdfiscal stress for many states. Excessive state spending in the1980s has contributed to recent fiscal problems in some states,but not generally.