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Voting with one's feet: an empirical analysis of public welfare and migration of the American Indian, 1985-1990
American Journal of Economics and Sociology, The, July, 1994 by Richard J. Cebula, Willie J. Belton
I
Introduction
SEVERAL YEARS AGO, Charles M. Tiebout (1956, 418) hypothesized that:
. . . the consumer-voter may be viewed as picking that community which best satisfies his preference pattern for public goods . . . the consumer-voter moves to that community whose local government best satisfies his set of preferences . . .
The process of expressing one's preferences for publicly provided goods and services is referred to as "voting with one's feet." To the extent that inter-community differences in the levels of public goods and services [and taxes] are not capitalized into property values, there is an incentive to move [migrate] to the community with the greatest "fiscal surplus."
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The hypothesis of voting with one's feet has been empirically investigated in a number of studies, including Cebula (1978; 1979), Cebula and Koch (1989), Chao and Renas (1976), Glantz (1974), Pack (1973), Renas (1980), and Sommers and Suits (1973). These studies investigate the impact of various state and local government policies, especially welfare benefit levels, on the geographic mobility of consumer-voters. In all cases, attention is focused on consumer-voters in the United States who are classified as either "white," "black" or "nonwhite," or "poor."
The purpose of this study is to examine the Tiebout hypothesis in relation to a population group heretofore largely ignored in this literature: the American Indian. In particular, the impacts of geographic welfare benefit differentials upon the location decision calculus of American Indian consumer-voters are examined. Hopefully, this analysis will shed light on such timely issues as the labor-market-efficiency effects of current welfare policies and the need for welfare reform.
II
Analysis
THE CASE OF THE AMERICAN INDIAN is unique from that of other population groups in the United States in several respects. To begin with, relative to all other major population groups, the American Indian is very poorly endowed with human capital. Unemployment is extraordinarily high among this population group. Levitan and Miller (1993, 15) observe that the Bureau of Indian Affairs [BIA] ". . . estimated that in January of 1991 the average unemployment rate on or near reservations was 45 percent." And they also note that "While the BIA may overestimate unemployment, its methodology offers a better indicator of the economic condition on reservations than the BLS (Bureau of Labor Statistics)." Given the extremely low level of human capital and the extremely high unemployment rates among American Indians, along with the, not surprisingly, very low per capita and median income levels within this population, of all major U.S. population groups American Indians may well be at the lowest rung of the economic ladder.
It is not at all surprising that "An inordinate proportion of reservation residents are therefore dependent on welfare" (Levitan and Miller, 1993, 16). Many reservation residents receive support in the form of AFDC (Aid to Families with Dependent Children); however, they also receive support in the form of food stamps, the FDPIR (the Food Distribution Program on Indian Reservations), and the BIA's general assistance program (Levitan and Miller, 1993, 16-17). The economic significance of welfare programs to the American Indian population is so great that, according to Levitan and Miller (1993, 17), ". . . most reservation economies are more dependent on welfare than employment as a source of income."
Until comparatively recently, the American Indian population has been principally concentrated on reservations. In the 1950s, a major move by the federal government to encourage relocation off the reservations was initiated (Brophy and Averle, 1966; and Sorkin, 1971). Thus, the American Indian was being pushed into a labor market for which he was very poorly prepared and which was less than enthusiastically receptive to him.(1)
Given these circumstances, it is argued here that the relocation decisions of American Indians may be very significantly influenced by the level of public assistance (welfare benefits). In other words, for American Indians lacking significant labor market skills (on the average), the simple need for survival would make the level of available public assistance a potentially very significant dimension the location decision calculus. Welfare benefits could be viewed as a form of income (Levitan and Miller, 1993, 17), as a form of long-term unemployment compensation, and/or as a "cushion" to fall back on in the event of economic/financial need (Cebula, 1979). In this circumstance, the Tiebout hypothesis, if it applies, would be manifested principally in a strong affinity of the American Indian population for high welfare areas. In view of the fact that many American Indian migrants come from an environment where welfare is more important ". . . than employment as a source of income" (Levitan and Miller, 1993, 17), this population group would seem to be an especially strong candidate for exhibiting an attraction to high welfare areas.
