Abstract

http://ssrn.com/abstract=1020450
 
 

References (44)



 


 



Federal, State, and Local Governments: Do Any of Them Promote Growth?


Matthew John Higgins


Georgia Institute of Technology - Scheller College of Business; National Bureau of Economic Research (NBER)

Andrew T. Young


West Virginia University - College of Business and Economics

Daniel Levy


Bar-Ilan University - Department of Economics; Emory University - Department of Economics; Rimini Center for Economic Analysis

September 5, 2007


Abstract:     
We use US county level data (3,058 observations) from 1970 to 1998 to explore the relationship between economic growth and the extent of government employment at three levels: federal, state and local. We find that increases in federal, state and local government employments are all negatively associated with economic growth. We find no evidence that government is more efficient at more decentralized levels - and thus reject Oates' (1972) "decentralization theorem." Furthermore, while we cannot separate out the productive and redistributive services of government, we document that the county-level income distribution became slightly wider from 1970 to 1998. For those who justify government activities in terms of equity concerns - perhaps even trading off economic growth for equity - the burden falls on them to show that the income distribution would have widened significantly more in the absence of government activities. We conclude that a release of government-employed labor inputs to the private sector would be growth-enhancing.

Number of Pages in PDF File: 35

Keywords: Economic Growth, Federal Government, State Government, Local Government, and County-Level Data

JEL Classification: O40, O11, O18, O51, R11, H50, H70

working papers series


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Date posted: October 11, 2007  

Suggested Citation

Higgins, Matthew John and Young, Andrew T. and Levy, Daniel, Federal, State, and Local Governments: Do Any of Them Promote Growth? (September 5, 2007). Available at SSRN: http://ssrn.com/abstract=1020450 or http://dx.doi.org/10.2139/ssrn.1020450

Contact Information

Matthew John Higgins (Contact Author)
Georgia Institute of Technology - Scheller College of Business ( email )
800 West Peachtree Street
Atlanta, GA 30308
United States
404-894-4368 (Phone)
404-894-6030 (Fax)
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Andrew T. Young
West Virginia University - College of Business and Economics ( email )
P.O. Box 6025
Morgantown, WV 26506
United States
3042934526 (Phone)
Daniel Levy
Bar-Ilan University - Department of Economics ( email )
Ramat-Gan, 5290002
Israel
+972 3 531-8345 (Phone)
+972 3 738-4034 (Fax)
HOME PAGE: http://econ.biu.ac.il/en/levy

Emory University - Department of Economics ( email )
1602 Fishburne Drive, Suite 306
Rich Building
Atlanta, GA 30322-0001
United States
HOME PAGE: http://economics.emory.edu/home/people/faculty/Levydaniel.html
Rimini Center for Economic Analysis ( email )
Via Patara, 3
Rimini (RN), RN 47900
Italy
HOME PAGE: http://www.rcfea.org/
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