Growth Under the Shadow of Expropriation? The Economic Impacts of Eminent Domain

TSE Working Paper No. 16-693

87 Pages Posted: 31 May 2017 Last revised: 2 Mar 2020

See all articles by Daniel L. Chen

Daniel L. Chen

Directeur de Recherche, Centre National de la Recherche Scientifique, Toulouse School of Economics, Institute for Advanced Study in Toulouse, University of Toulouse Capitole, Toulouse, France

Susan Yeh

Independent

Date Written: January 20, 2020

Abstract

Is it justified for states to appropriate private property rights? If so, should governments regulate or expropriate? Competing models predict that government power of appropriation causes underinvestment, over investment, and growth. We use random assignment of U.S. federal court judges setting geographically-local precedent to document all three mechanisms. Government power increased expropriation, highway construction, property values, and growth, especially in government, transportation, and construction as well as agriculture, retail, and financial sectors, but increased displacement of racial minorities, who became more likely to be unemployed and live in public housing. These results are consistent with minority Democrat judges being more likely to strike down government expropriations while Republican former federal prosecutors being more likely to uphold them. However, government power to regulate did not increase displacement or racial inequality, while spurring growth and property values, suggesting that regulation relative to expropriation may be more Pareto improving.




Keywords: property rights, displacement, regulation, takings

JEL Classification: R38, K11, R52

Suggested Citation

Chen, Daniel L. and Yeh, Susan, Growth Under the Shadow of Expropriation? The Economic Impacts of Eminent Domain (January 20, 2020). TSE Working Paper No. 16-693, Available at SSRN: https://ssrn.com/abstract=2977074 or http://dx.doi.org/10.2139/ssrn.2977074

Daniel L. Chen (Contact Author)

Directeur de Recherche, Centre National de la Recherche Scientifique, Toulouse School of Economics, Institute for Advanced Study in Toulouse, University of Toulouse Capitole, Toulouse, France ( email )

Toulouse School of Economics
1, Esplanade de l'Université
Toulouse, 31080
France

Susan Yeh

Independent ( email )

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