The federal government subsidizes state spending on welfare, thus changing the effective price to states of welfare
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The federal government subsidizes state spending on welfare, thus changing the effective price to states of welfare spending. According to Baicker [2005], the elasticity of state spending on benefits per recipient is 0.38 . Suppose that the federal government matches state welfare spending on a one-for-one basis, and then changes to a two-for-one basis. How would you expect state welfare spending to change?
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