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Journal Article

The Politics of Competitive Federalism: A Race to the Bottom in Welfare Benefits?

Craig Volden
American Journal of Political Science
Vol. 46, No. 2 (Apr., 2002), pp. 352-363
DOI: 10.2307/3088381
Stable URL: http://www.jstor.org/stable/3088381
Page Count: 12
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The Politics of Competitive Federalism: A Race to the Bottom in Welfare Benefits?
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Abstract

Existing evidence of a race to the bottom in welfare benefits may be an artifact of inflation and internally focused state policy adjustments. Declines in real benefits due to inflation lead to the appearance of high benefit "welfare magnets" cutting their payments more dramatically than lower benefit states and to a correlation in benefit changes across the states. This article argues that a more accurate specification of welfare politics focuses on the presence or absence of actual legislated payment increases in the face of inflation. Logit and ordered logit analyses of payment changes under the AFDC program in the states from 1975 to 1990 show the role of inflation and political considerations in determining benefit adjustments. Rather than states actively undercutting one another to avoid becoming welfare magnets, this article supports a different version of competitive federalism. States wish to increase their welfare benefits, but hesitate until neighboring states do the same.

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