Can State Income Transfer Policy Promote Economic Development?

Can state income transfers contribute to economic development? This essay concludes: maybe, and cautions against a full-speed-ahead approach to converting income transfers into economic development tools. Recent policy initiatives involving unemployment insurance and welfare programs generally might contribute to economic development if linked with complementary development activities. Strategies that envision using unemployment insurance and welfare benefits to support recipients' self-employment efforts may hold limited promise and are worth exploring on a small scale at this time. States that can attract retirees and their Social Security and other retirement incomes can generate new local jobs and add an element of stability to their economic base. The role of transfers in economic development policy is likely to be minor under any circumstances.