This article provides a means of assessing the contribution of public expenditures to allocative efficiency, given the preferences of those who make charitable contributions. A test statistic is derived, which, when compared to the actual volume of government subsidies received by enterprises, indicates whether they are over- or under-subsidized. The statistic is couched in terms of parameters for which empirical estimates can be made. Employing existing estimates of these parameters, the use of such a statistic is then illustrated with reference to public expenditures for rehabilitation facilities in which disabled persons perform remunerative work—sheltered workshops.
Get full access to this article
View all access options for this article.
References
1.
AbramsB.SchmitzM. (1978) “The ‘crowding out’ effect of governmental transfers on private charitable contributions.”Public Choice33: 29–39.
2.
FeldsteinM. (1975) “The income tax and charitable contributions: Part I—aggregate and distributional effects.”National Tax J. 28: 81–100.
3.
FerejohnJ.ForsytheR.NollR.PalfreyT. (1980) An Experimental Examination of Auction Mechanisms for Discrete Public Goods. Social Science Working Paper 262. Pasadena: California Institute of Technology.
4.
AssociatesGreenleigh (1976) The Role of Sheltered Workshops in the Rehabilitation of the Severely Handicapped. New York: Author.
5.
MenchikP.WeisbrodB. (1981) “Volunteer labor supply in the provision of collective goods,” in WhiteM. (ed.) Nonprofit Firms in a Three-Sector Economy. Washington, DC: Urban Institute.
6.
MorganJ.DyeR.HybelsJ. (1977) “Results from two national surveys of philanthropic activity,” pp. 157–324 in Research Papers Sponsored by The Commission on Private Philanthropy and Public Need, Vol. 1. Washington, DC: U. S. Department of the Treasury.
7.
SamuelsonP. (1954) “The pure theory of public expenditures.”Rev. of Econ. Statistics36: 386–389.
8.
SmithV. (1980) “Experiments with a decentralized mechanism for public good decisions.”Amer. Econ. Rev.70: 584–599.
9.
SmithV. (1978) “Experiments with a decentralized mechanism for public good decisions.”University of Arizona, Tucson. (mimeo).
10.
U. S. Bureau of the Census (1974) National Survey of Giving. Ann Arbor: University of Michigan Survey Research Center.
11.
U. S. Department of Labor, Employment Standards Administration (1979) Sheltered Workshop Study, vol. 2. Washington, DC: Author.
12.
U. S. Department of Labor, Employment Standards Administration (1977) Sheltered Workshop Study, vol. 1 and statistical appendix to vol. 1. Washington, DC: Author.
