Assistance to the poor in a federal system

Abstract

This paper explores the roles of different levels of government in assisting the poor. Using a model incorporating utility interdependence, the paper first presents some theoretical results indicating how levels of poor relief vary with the extent of mobility of the poor under both centralized and decentralized systems of support. It then provides a survey of the empirical work on migration of the poor along with a brief historical discussion of the experience under the English Poor Laws. The concluding section turns to normative issues and contends that mobility of the poor is a basic source of inefficiency in wholly decentralized systems of support; this inefficiency, along with certain other equity considerations, establishes a role for the central government in assistance to the poor.