Why Some Cities are Growing and Others Shrinking

20 Pages Posted: 17 Apr 2013

See all articles by Dean Stansel

Dean Stansel

Southern Methodist University (SMU) - O’Neil Center for Global Markets and Freedom

Date Written: June 15, 2011

Abstract

Over the last three decades, large cities like Pittsburgh, Detroit, Cleveland, Buffalo, and Toledo have seen their populations shrink, while areas like Houston, Atlanta, Dallas, Tampa, and Phoenix have seen their populations grow rapidly. Examining the policy differences between high-growth and low-growth areas can provide evidence that may help declining cities reverse their fortunes.

This article details that relationship between taxes and growth for the 100 largest U.S. metropolitan areas. In the 10 highest-tax metro areas, the state and local tax burden accounted for about 12.4 percent of personal income. In those same areas, population grew by 21.3 percent from 1980 to 2007, employment grew by 40.1 percent, and real personal income grew by 75.5 percent. In contrast, taxes were only 8.3 percent of personal income in the 10 lowest-tax areas. The economic growth in those areas was much faster. Population grew by 64.4 percent, employment by 107.6 percent, and real personal income by 157.3 percent.

Keywords: metropolitan policy, population trends, urban policy, city tax rates

JEL Classification: H70, H71, H79

Suggested Citation

Stansel, Dean, Why Some Cities are Growing and Others Shrinking (June 15, 2011). Cato Journal, Vol. 31, No. 2, 2011. Available at SSRN: https://ssrn.com/abstract=2251398

Dean Stansel (Contact Author)

Southern Methodist University (SMU) - O’Neil Center for Global Markets and Freedom ( email )

Edwin L. Cox School of Business
Dallas, TX 75275-0333
United States

HOME PAGE: http://https://www.smu.edu/Cox/Departments/FacultyDirectory/StanselDean

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