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Federal funds flow no bargain for Midwest
Federal grants during the eighties
Federal grants policy changed significantly during the eighties. Grants to states and localities decreased as a share of GDP, the first sustained decline in aid since the forties. Restrictions on the use of federal funds were eased with the conversion of categorical matching aid programs into unconditional block grants. At the same time, aid to individuals rose at the expense of other major grants categories. Taken together, these changes in federal grants tended to decrease state and local government investment in physical and human capital. I estimate that the decline in federal grants for ...