The Political Economy of Intergovernmental Grant Seeking: Targeting and Suburbs, 1977 and 1982

Targeting moneys on low-income communities to allow them to meet local needs better is a critical role of intergovernmental aid. However, the extent to which targeting has actually occurred has varied considerably during recent years. In this article we explore the incentives that various types of local governments face in their pursuit of aid and how the federal commitment to targeting affects the distribution of the benefits and costs of the application process. We then measure the effect of community income and racial characteristics on participation in federal intergovernmental aid programs. We find that between 1977 and 1982 the reduced federal commitment to targeting led to a decrease in the participation of low-income suburbs in federal aid programs.