Social Transfer Programs as Non-Spatially-Targeted Methods of Reducing Interregional Geographic Inequality

Abstract

Geographic inequality among regions of the United States has grown substantially over the past 40 years, accompanied by economic and social chal-lenges. We consider the role that national social insurance transfer programs, such as Social Security and the earned income tax credit (EITC), play in reducing geographic inequality. Although these programs are not spatially targeted and do not have an explicit goal of reducing geographic inequality, they nonetheless have that outcome because they are disproportionately received by residents of low-income regions. We show that social transfers reduced interregional inequality in 2019 by 12 percent, equivalent to reversing 28.6 percent of the growth in pretransfer inequality since the 1970s. Retirement benefits contributed the largest total reduction in inequality, whereas programs that were federally administered but whose recipients disproportionately lived in low-income regions—such as veterans’ ben-efits, the EITC, and the Supplemental Nutrition Assistance Program—had the greatest spending-adjusted reduction.