A common rationale in allocating government grants and aid is income redistribution. Consider receipts by individuals for example. Under a host of programs, economic hardship is a necessary and often sufficient condition for receiving benefits. A second major beneficiary category for federal and state aid is municipalities and localities. There again equity considerations frequently affect grant receipts, although purely demographic factors such as population can also influence the level of assistance. Considered together, one would expect disbursements across these two broad aid categories to be explained by varying economic and demographic factors consistent with the intended equity rationale. Recently, however, economists have begun to question the primacy of the proffered redistributive motive. They suggest instead that political influence vested in committee assignments, chairmanships, and legislative tenure accounts significantly, if not exclusively, for the allocation of federal grants across states. At present, the empirical support for this hypothesis is growing, but neither overwhelming nor without its critics. Perhaps the fairest assessment of the empirical literature on this issue is that it is in its incipiency.
Cook, Robert W. and Robert C. Dolan. 1983. "The Influence of Representation in Intrastate Grant Disbursement." E.C.R.S.B. 83-4. Robins School of Business White Paper Series. University of Richmond, Richmond, Virginia.