The Effects of Local Government Expenditures on Income Mobility in the United States: 1982-1997

Abstract

Newly compiled data has shown that income mobility-the probability that the children of the poor will reach higher incomes than their parents- varies across the United States. However, the causes for the full extent of such variation remain to be explained. This study combines Census data on local government expenditures with the new data on income mobility to test the hypothesis that local government expenditures affect income mobility. My results indicate that a statistically significant relationship exists between expenditures and mobility, but also that the timing and type of expenditure can determine whether the effect is positive, negative, or even matters at all. Why such different consequences exist should be the subject of further study.