Taking Care of the Elderly: Political Economy of the Old Age Assistance Program, 1931-1955

Abstract

We use the variation in political incentives of state governors provided by term limits to show that the variation in the level of Old Age Assistance (OAA) benefits per recipient between 1931 and 1955 was due to governors' vote seeking behavior. Governors who faced reelection were more likely to increase benefits than "lame duck" office holders. The manipulation of OAA only occurred in states with intermediate sizes of the elderly population. In addition, this manipulation increased with the degree of political competition. This paper provides evidence that the elderly and not other vulnerable groups, were the target of politically motivated transfers in accordance with the electoral incentives of state governors.