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The Private Sector Impact Of State And Local Government: Has More Become Bad?

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  • LORI L. TAYLOR
  • STEPHEN P. A. BROWN

Abstract

Early research suggests some increases in state and local government spending more than offset the negative effects of the tax increases needed to fund them. More recent research finds the growth of state and local government generally discourages private sector growth. Using panel data on private employment, capital and output for the 48 contiguous states, the authors find that government size influences whether additional government helps or hinders private sector growth. The rapid growth of state and local government in the late 1980s likely outstripped the willingness to pay. With government growth moderating in the 1990s, however, the private sector response has become more favorable. (JEL "H3", "H4", "R5") Copyright 2006 Western Economic Association International.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

Volume (Year): 24 (2006)
Issue (Month): 4 (October)
Pages: 548-562

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Handle: RePEc:bla:coecpo:v:24:y:2006:i:4:p:548-562

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Cited by:
  1. Kamar Ali & Mark Partridge & Dan Rickman, 2012. "International immigration and domestic out-migrants: are domestic migrants moving to new jobs or away from immigrants?," The Annals of Regional Science, Springer, vol. 49(2), pages 397-415, October.

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