Overcoming City Limits: Vertical and Horizontal Models of Local Redistributive Policy Making*

Abstract

Objectives.Contrary to conventional wisdom, Census data show a substantial local role in providing health, housing, and public welfare services. I evaluate two models to explain local social welfare: an intergovernmental model, based on federal and state funds, and an interjurisdictional model, based on measures of local monopoly power. Methods.I estimate a panel data model of local redistributive expenditures from 1992–2002 to test between these alternative explanations for local redistribution. Results.I find that vertical arrangements tend to drive local redistributive spending. Conclusions.Intergovernmental factors drive local social welfare policy and suppress the local welfare race to the bottom.

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