TY  - JOUR
AU  - Gruber,Jonathan
AU  - Hungerman,Daniel M.
TI  - Faith-Based Charity and Crowd Out during the Great Depression
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11332
PY  - 2005
Y2  - May 2005
UR  - http://www.nber.org/papers/w11332
L1  - http://www.nber.org/papers/w11332.pdf
N1  - Author contact info:
Jonathan Gruber
MIT Department of Economics
E52-355
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8892
Fax: 617/253-1330
E-Mail: gruberj@mit.edu

Daniel M. Hungerman
Department of Economics
University of Notre Dame
439 Flanner Hall
Notre Dame, IN 46556-5602
Tel: 574/631-4495
Fax: 574/631-4783
E-Mail: dhungerm@nd.edu
AB  - Interest in religious organizations as providers of social services has increased dramatically in recent years. Churches in the U.S. were a crucial provider of social services through the early part of the twentieth century, but their role shrank dramatically with the expansion in government spending under the New Deal. In this paper, we investigate the extent to which the New Deal crowded out church charitable spending in the 1930s. We do so using a new nationwide data set of charitable spending for six large Christian denominations, matched to data on local New Deal spending. We instrument for New Deal spending using measures of the political strength of a state's congressional delegation, and confirm our findings using a different instrument based on institutional constraints on state relief spending. With both instruments we find that higher government spending leads to lower church charitable activity. Crowd-out was small as a share of total New Deal spending (3%), but large as a share of church spending: our estimates suggest that church spending fell by 30% in response to the New Deal, and that government relief spending can explain virtually all of the decline in charitable church activity observed between 1933 and 1939.
ER  -