The Impact of Local Decentralization on Economic Growth: Evidence from U.S. Counties

35 Pages Posted: 1 Dec 2009

See all articles by George W. Hammond

George W. Hammond

West Virginia University - College of Business & Economics

Mehmet Serkan Tosun

University of Nevada, Reno - Department of Economics; IZA Institute of Labor Economics

Abstract

We analyze the impact of fiscal decentralization on U.S. county population, employment, and real income growth. Our findings suggest that government organization matters for local economic growth, but that the impacts vary by government unit and by economic indicator. We find that single-purpose governments per square mile have a positive impact on metropolitan population and employment growth, but no significant impact on nonmetropolitan counties. In contrast, the fragmentation of general-purpose governments per capita has a negative impact on employment and population growth in nonmetropolitan counties. Our results suggest that local government decentralization matters differently for metropolitan and nonmetropolitan counties.

Keywords: fiscal decentralization, metropolitan, nonmetropolitan, population, employment, income, spatial econometrics

JEL Classification: E62, H7, R11

Suggested Citation

Hammond, George W. and Tosun, Mehmet Serkan, The Impact of Local Decentralization on Economic Growth: Evidence from U.S. Counties. IZA Discussion Paper No. 4574, Available at SSRN: https://ssrn.com/abstract=1515121 or http://dx.doi.org/10.2139/ssrn.1515121

George W. Hammond (Contact Author)

West Virginia University - College of Business & Economics ( email )

Bureau of Business and Economic Research
Morgantown, WV 26506
United States

Mehmet Serkan Tosun

University of Nevada, Reno - Department of Economics ( email )

1664 N. Virginia Street
Reno, NV 89557
United States
775-784-6678 (Phone)

HOME PAGE: http://www.coba.unr.edu/econ/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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