Welfare Reform and Interstate Welfare Competition

Research Report

Welfare Reform and Interstate Welfare Competition

Theory and Evidence
December 1, 1998

Abstract

This paper evaluates the evidence in favor of a downward bias in benefits created by moving from federal matching grants to block grants. The evidence is mixed. Benefit levels in nearby states appear to affect a given state's benefit choice. Policymakers act as if welfare migration is a significant phenomenon. This may result in a downward bias in benefits. The paper also raises several issues about this theory which require additional research.

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