Open AccessDoes Welfare Spending Crowd Out Charitable Activity? Evidence from Historical England Under the Poor Laws
Author(s) -
BobergFazlić Nina,
Sharp Paul
Publication year - 2017
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/ecoj.12251
Subject(s) - crowding out , public spending , welfare , government spending , economics , government (linguistics) , crowding , public economics , law , demographic economics , labour economics , political science , macroeconomics , market economy , psychology , linguistics , philosophy , neuroscience , politics
This study examines the relationship between government spending and charitable activity. We present a novel way of testing the ‘crowding out hypothesis’, making use of the fact that welfare provision under the Old Poor Laws was decided at the parish level, thus giving heterogeneity within a single country. Using data on poor relief spending combined with data on charitable incomes by county before and after 1800, we find a positive relationship: areas with more public provision also enjoyed higher levels of charitable income. These results are confirmed when instrumenting for Poor Law spending and when looking at first differences.