Government Expropriation Increases Economic Growth and Racial Inequality: Evidence from Eminent Domain

TSE Working Paper No. 16-693

80 Pages Posted: 31 May 2017 Last revised: 25 Dec 2018

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: November 19, 2018

Abstract

Do legal institutions affect growth and inequality? Hold-up problems among numerous property right holders stymie growth, while secure property rights motivate investment and expropriating from the poor spurs inequality. Using novel geo-coded data on all government takings appellate precedent from 1950-2008 and randomly assigned judges, we find that pro-takings precedents spurred economic growth, especially in construction, transportation, and government sectors, and also increased land expropriation, highway construction, and property values, but displaced non-whites to public housing and unemployment. Pro-regulatory takings precedent likewise spurred economic growth and property values, but did not displace non-whites nor increase racial inequality. We build a model that embeds existing theories of government takings power affecting underinvestment, overinvestment, and economic growth to interpret these results.







Keywords: property rights, displacement, regulation, takings

JEL Classification: R38, K11, R52

Suggested Citation

Chen, Daniel L. and Yeh, Susan, Government Expropriation Increases Economic Growth and Racial Inequality: Evidence from Eminent Domain (November 19, 2018). 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 )

21 allée de Brienne
31015 Toulouse cedex 6 France
Toulouse, 31015
France

Susan Yeh

Independent ( email )

No Address Available

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