AcademicsWorking Papers

To Give and Get: Poverty Alleviation as A Local Public Good
Michael Dorsch, Brett Graham
#002037 20131014 (published)
The paper theoretically analyzes the public choice of transfer payments to the poor (welfare spending) by modeling poverty alleviation as a public good provided by local governments. Voters that are not welfare recipients support welfare spending out of self-interest, rather than altruism, due to the public good property of poverty alleviation. Equilibrium policies are then analyzed according to characteristics of localities, such as population density and income inequality. More generally, our paper provides a technique to solve certain multiple peak problems that arise when a public goods policy has an explicitly redistributive component. To provide empirical support for our model, we use county-level demographic and government expenditure data from the United States Census.
JEL-Codes: D72, H75
Keywords: collective choice, poverty policy, public goods

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