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Higher Education Spending is a Better Job Creator than State Tax Cuts

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  • Amatov, Aitbek
  • Dorfman, Jeffrey H.

Abstract

By estimating employment elasticities of various state-level fiscal policies we find that state tax cuts are inefficient job creators, with an elasticity between 0 and -0.1, and lead to a deterioration in state budgets. In contrast, we find that more state government spending on higher education is approximately self-financing, creating enough additional jobs, and, thereby, tax revenue, to offset the higher spending. This suggests that states competing for business and wealthy cross-state migrants by offering low taxes are pursuing an inferior strategy compared to competing on a well-funded, high-quality state higher-education system.

Suggested Citation

  • Amatov, Aitbek & Dorfman, Jeffrey H., 2015. "Higher Education Spending is a Better Job Creator than State Tax Cuts," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 33(1).
    • Handle: RePEc:ags:jloagb:311375
    DOI: 10.22004/ag.econ.311375
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    Agribusiness;

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