Spending on Social Welfare Programs in Rich and Poor States. Final Report.. A. Historical and Cross-State Perspective: Trends and Patterns

07/01/2004

The connections between state fiscal capacity and spending on social welfare have undergone vast changes in recent years. Between 1977 and 2000, major shifts occurred in how much was spent on social welfare programs, how states allocated funding across different social welfare functions, and how state fiscal capacity was related to these developments. To compare changes in spending patterns for rich and poor states over time, we classified all of the states plus the District of Columbia into four quartiles with respect to their fiscal capacity, as measured by real per capita income averaged over the 24-year period. Exhibit III-1 shows a map indicating the states in each of the quartiles, from the richest states in Quartile 1 (shown as the lightest colors) to the poorest in Quartile 4 (shown as the darkest colors). States with the lowest per capita income are generally found in the South and the West, while the wealthier states are located in the Northeast, around the Great Lakes, and on the Pacific Coast.

Exhibit III-1.
States by Fiscal Capacity Quartile

States by Fiscal Capacity Quartile

 

Selected Characteristics Quartile 1 Quartile 2 Quartile 3 Quartile 4
Mean per capita personal income, 1977-2000 (2000 dollars) $24,794 $21,387 $19,242 $17,058
Mean percentage of people under federal poverty level, 1977-2000 11.0 11.0 13.2 17.1
Mean percentage of population unemployed, 1977-2000 3.1 3.0 2.7 3.2
Median population density (persons per square mile), 1977-2000 338 89 57 52

Exhibit III-1 also displays information about states in these different quartiles, including average real per capita income, poverty rates, unemployment (per capita), and population density-all characteristics included in the econometric models as independent variables. As well as differing in income levels, these poor states also had higher poverty rates and lower population densities (they were generally more rural) though, surprisingly, they did not have much higher per capita unemployment rates.16

This classification is simplistic. If one calculated fiscal capacity quartiles every year, some states would shift from one to the other over time. However, these simple four-level rankings showed unexpected stability. Most of the states would not shift quartiles even if allowed, and where changes did occur, the changes were nearly always to an adjacent quartile, not a jump of two or three.

View full report

Preview
Download

"report.pdf" (pdf, 1.52Mb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®

View full report

Preview
Download

"apa.pdf" (pdf, 2.64Mb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®