TY  - JOUR
AU  - Baicker,Katherine
TI  - The Spillover Effects of State Spending
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8383
PY  - 2001
Y2  - July 2001
UR  - http://www.nber.org/papers/w8383
L1  - http://www.nber.org/papers/w8383.pdf
N1  - Author contact info:
Katherine Baicker
Professor of Health Economics
Department of Health Policy and Management
Harvard School of Public Health
677 Huntington Avenue
Boston, MA 02115
E-Mail: kbaicker@hsph.harvard.edu
AB  - This paper estimates the degree to which state spending is influenced by the spending of neighboring states. Focusing on mandated increases in welfare spending, I find that each dollar of state spending causes spending in neighboring states to increase by 37 to 88 cents. I use more plausibly exogenous variation than previous studies to abstract from the endogeneity of neighbors' spending, and show that previous estimates may have been biased. I also explore the strength of several different measures of neighborliness. The most predictive measure is the degree of population mobility between states, suggesting that concerns about migration may drive the interdependence of state spending policy.
ER  -