By using American state-level data from 1999 to 2008, this article explores how the recent immigrant influx has influenced public welfare spending in the American states. By integrating the race/ethnicity and globalization compensation theory, I hypothesize that immigration will increase welfare spending in states with a bleak job market and exclusive state immigrant welfare policy; in contrast, immigration will decrease welfare spending in states with a good job market and inclusive state immigrant welfare policy. Empirical tests show evidence for both hypotheses, suggesting that the applicability of general political science theories depends on a combination of state policy and economic contexts.

Social services in the United States are supplied by both the public and private sectors. Previous political science research has focused on public transfers or Medicaid; I study “Other Public Welfare” programs that include contracts and grants to private social services providers, focusing on the relationship between the two sectors. My results imply that an increase in either Other Public Welfare spending or private individual and family services employees leads to an increase in the other sector. I find weaker evidence of similar relationships involving private residential care or day care services, and private social services employment is generally independent of public spending on transfers and Medicaid. My results have implications for the full effects of changes in public welfare spending, including the effects on the private sector, as well as the effects of organized interests on public welfare spending.