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Welfare Policy: increasing involvement of the states. Do we gain or lose?
Unformatted Document Text:  1 Please do not quote. Title: Welfare Policy: Increasing involvement of the states. Do we gain or lose? Author: Osung Kwon Introduction The purpose of this study is to assess the recent devolution of US welfare policy. Of particular interest is the question of whether the changes in the degree of governmental decentralization have affected the levels of state welfare spending. During the last twenty years, fiscal decentralization has been advocated in the US. The slogan of “smaller government with lower taxes and fewer services” has been put forward repeatedly. In the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the federal government replaced detailed rules and generous matching grants to welfare programs by a system of block grants with few strings. Major concerns about this devolution of welfare programs were that states would receive less federal funding and deteriorate the service quality. The conventional argument regarding welfare policy prescribes that the federal government be engaged in that function. Oates (1972) argues that because the mobility of residents among jurisdictions may limit the scope of welfare programs by the lower levels of government, the quantity of welfare benefit delivered will be lower than the

Authors: Kwon, Osung.
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1
Please do not quote.
Title: Welfare Policy: Increasing involvement of the states. Do we gain or lose?
Author: Osung Kwon
Introduction
The purpose of this study is to assess the recent devolution of US welfare policy.
Of particular interest is the question of whether the changes in the degree of
governmental decentralization have affected the levels of state welfare spending.
During the last twenty years, fiscal decentralization has been advocated in the US.
The slogan of “smaller government with lower taxes and fewer services” has been put
forward repeatedly. In the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996, the federal government replaced detailed rules and generous matching
grants to welfare programs by a system of block grants with few strings. Major concerns
about this devolution of welfare programs were that states would receive less federal
funding and deteriorate the service quality.
The conventional argument regarding welfare policy prescribes that the federal
government be engaged in that function. Oates (1972) argues that because the mobility
of residents among jurisdictions may limit the scope of welfare programs by the lower
levels of government, the quantity of welfare benefit delivered will be lower than the


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