Does Urbanization Mean Bigger Governments?

27 Pages Posted: 4 Oct 2018

See all articles by Michael Jetter

Michael Jetter

University of Western Australia; IZA

Christopher Parmeter

University of Miami

Multiple version iconThere are 2 versions of this paper

Date Written: October 2018

Abstract

In this paper, we introduce urbanization as an important driver of government size. Using panel data for 175 countries from 1960 to 2010, we find that there is a close link between urbanization and the size of the public sector, especially when looking at education, health care, and social issues. Various robustness checks confirm this finding. An analysis of state‐level public spending in Colombia and Germany confirms our hypothesis on the subnational level. On the microeconomic level, people in urban areas acknowledge that governments should take more responsibility, and they are more in favor of redistribution. This finding can help to explain the evolution of government size, and it can also predict the present and future needs of urbanizing areas.

Keywords: Government size, population concentration, urbanization

Suggested Citation

Jetter, Michael and Parmeter, Christopher, Does Urbanization Mean Bigger Governments? (October 2018). The Scandinavian Journal of Economics, Vol. 120, Issue 4, pp. 1202-1228, 2018, Available at SSRN: https://ssrn.com/abstract=3260123 or http://dx.doi.org/10.1111/sjoe.12256

Michael Jetter (Contact Author)

University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
AUSTRALIA

Christopher Parmeter

University of Miami ( email )

Coral Gables, FL 33124
United States

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