Abstract

http://ssrn.com/abstract=723301
 
 

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Faith-Based Charity and Crowd Out During the Great Depression


Jonathan Gruber


Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Daniel M. Hungerman


University of Notre Dame

May 2005

NBER Working Paper No. w11332

Abstract:     
Interest in religious organizations as providers of social services has increased dramatically in recent years. Churches in the U.S. were a crucial provider of social services through the early part of the twentieth century, but their role shrank dramatically with the expansion in government spending under the New Deal. In this paper, we investigate the extent to which the New Deal crowded out church charitable spending in the 1930s. We do so using a new nationwide data set of charitable spending for six large Christian denominations, matched to data on local New Deal spending. We instrument for New Deal spending using measures of the political strength of a state's congressional delegation, and confirm our findings using a different instrument based on institutional constraints on state relief spending. With both instruments we find that higher government spending leads to lower church charitable activity. Crowd-out was small as a share of total New Deal spending (3%), but large as a share of church spending: our estimates suggest that church spending fell by 30% in response to the New Deal, and that government relief spending can explain virtually all of the decline in charitable church activity observed between 1933 and 1939.

Number of Pages in PDF File: 45

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Date posted: June 14, 2005  

Suggested Citation

Gruber, Jonathan and Hungerman, Daniel M., Faith-Based Charity and Crowd Out During the Great Depression (May 2005). NBER Working Paper No. w11332. Available at SSRN: http://ssrn.com/abstract=723301

Contact Information

Jonathan Gruber (Contact Author)
Massachusetts Institute of Technology (MIT) - Department of Economics ( email )
50 Memorial Drive
Room E52-355
Cambridge, MA 02142
United States
617-253-8892 (Phone)
617-253-1330 (Fax)
HOME PAGE: http://web.mit.edu/gruberj/www/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Daniel M. Hungerman
University of Notre Dame ( email )
Notre Dame, IN 46556-5646
United States
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