State and local policy, factor markets and regional growth
AbstractA large and growing literature to explain how state and local policies affect factor markets, firm location and economic growth has developed in three distinct threads. These threads have variously emphasized how policy and natural amenities affect regional economic growth or firm location; how variations in policy and natural amenities can lead to persistent wage differentials across regions; and how regional variation in factor inputs, including public capital, affects output. In this article, we expand the modeling framework of Roback and Gyourko and Tracy to integrate these threads into a single inquiry about how state and local policies—including the provision public capital—affects factor markets and economic growth. Using the model as the basis for estimation, we find that state and local policies have a more profound influence on the private capital-to-labor ratio in a region than on private output. Furthermore, the evidence suggests that the growth of government—either in the form of services or public capital—discourages private sector growth.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Federal Reserve Bank of Dallas in its series Working Papers with number 0202.
Date of creation: 2002
Date of revision:
Other versions of this item:
- Brown, Stephen P. A. & Hayes, Kathy J. & Taylor, Lori L., 2003. "State and Local Policy, Factor Markets, and Regional Growth," The Review of Regional Studies, Southern Regional Science Association, vol. 33(1), pages 40-60.
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
- R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
- R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Patricia E. Beeson & Randall W. Eberts, 1987.
"Identifying productivity and amenity effects in interurban wage differentials,"
8707, Federal Reserve Bank of Cleveland.
- Beeson, Patricia E & Eberts, Randall W, 1989. "Identifying Productivity and Amenity Effects in Interurban Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 443-52, August.
- David Aschauer, 1988.
"Is public expenditure productive?,"
88-7, Federal Reserve Bank of Chicago.
- Hanushek, E-A & Rivkin, S-G & Taylor, L-L, 1995.
"Aggregation and the Estimated Effects of School Resources,"
RCER Working Papers
397, University of Rochester - Center for Economic Research (RCER).
- Hanushek, Eric A & Rivkin, Steven G & Taylor, Lori L, 1996. "Aggregation and the Estimated Effects of School Resources," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 611-27, November.
- Eric A. Hanushek & Steven G. Rivkin & Lori L. Taylor, 1996. "Aggregation and the Estimated Effects of School Resources," NBER Working Papers 5548, National Bureau of Economic Research, Inc.
- Leslie E. Papke, 1989.
"Interstate Business Tax Differentials and New Firm Location: Evidence from Panel Data,"
NBER Working Papers
3184, National Bureau of Economic Research, Inc.
- Papke, Leslie E., 1991. "Interstate business tax differentials and new firm location : Evidence from panel data," Journal of Public Economics, Elsevier, vol. 45(1), pages 47-68, June.
- Catherine J. Morrison & Amy Ellen Schwartz, 1992.
"State Infrastructure and Productive Performance,"
NBER Working Papers
3981, National Bureau of Economic Research, Inc.
- Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
- Gyourko, Joseph & Tracy, Joseph, 1989.
"The Importance of Local Fiscal Conditions in Analyzing Local Labor Markets,"
Journal of Political Economy,
University of Chicago Press, vol. 97(5), pages 1208-31, October.
- Joseph Gyourko & Joseph S. Tracy, 1986. "The Importance of Local Fiscal Conditions in Analyzing Local Labor Markets," NBER Working Papers 2040, National Bureau of Economic Research, Inc.
- Alicia H. Munnell, 1990.
"How does public infrastructure affect regional economic performance?,"
Conference Series ; [Proceedings],
Federal Reserve Bank of Boston, vol. 34, pages 69-112.
- Alicia H. Munnell & Leah M. Cook, 1990. "How does public infrastructure affect regional economic performance?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 11-33.
- Wayne B. Gray, 1997.
"Manufacturing Plant Location: Does State Pollution Regulation Matter?,"
NBER Working Papers
5880, National Bureau of Economic Research, Inc.
- Wayne B Gray, 1997. "Manufacturing Plant Location: Does State Pollution Regulation Matter?," Working Papers 97-8, Center for Economic Studies, U.S. Census Bureau.
- Haughwout, Andrew F., 1998. "Aggregate Production Functions, Interregional Equilibrium, and the Measurement of Infrastructure Productivity," Journal of Urban Economics, Elsevier, vol. 44(2), pages 216-227, September.
- Jaume Puig-Junoy, 2001. "Technical Inefficiency and Public Capital in U.S. States: A Stochastic Frontier Approach," Journal of Regional Science, Wiley Blackwell, vol. 41(1), pages 75-96.
- Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
- Taylor Lori L., 1995. "Allocative Inefficiency and Local Government," Journal of Urban Economics, Elsevier, vol. 37(2), pages 201-211, March.
- John G. Fernald, 1999.
"Roads to Prosperity? Assessing the Link between Public Capital and Productivity,"
American Economic Review,
American Economic Association, vol. 89(3), pages 619-638, June.
- John Fernald, 1997. "Roads to prosperity? assessing the link between public capital and productivity," International Finance Discussion Papers 592, Board of Governors of the Federal Reserve System (U.S.).
- Gunther, Jeffery W & Schmidt, Ronald H, 1993. "Increasing the Efficiency of Pooled Estimation with a Block-Diagonal Covariance Structure," The Annals of Regional Science, Springer, vol. 27(2), pages 133-42.
- Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-49, August.
- Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
- Alfredo M. Pereira, 2001. "On the Effects of Public Investment on Private Investment: What Crowds in What?," Public Finance Review, , vol. 29(1), pages 3-25, January.
- Timothy J. Bartik, 2002. "The Effects of Environmental Regulation on Business Location in the United States," Book chapters authored by Upjohn Institute researchers, in: Wayne B. Gray (ed.), Economic Costs and Consequences of Environmental Regulation, pages 129-151 W.E. Upjohn Institute for Employment Research.
- Riddel, Mary & Schwer, R. Keith, 2003. "Regional Innovative Capacity with Endogenous Employment: Empirical Evidence from the U.S," The Review of Regional Studies, Southern Regional Science Association, vol. 33(1), pages 73-84.
- Neumann, George R & Topel, Robert H, 1991. "Employment Risk, Diversification, and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1341-65, November.
- Grosskopf, Shawna & Hayes, Kathy J. & Taylor, Lori L. & Weber, William L., 2001. "On the Determinants of School District Efficiency: Competition and Monitoring," Journal of Urban Economics, Elsevier, vol. 49(3), pages 453-478, May.
- Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
- Eric Thompson & George Hammond & Stephan Weiler, 2006. "Amenities, local conditions and fiscal determinants of factor growth in rural America," Research Working Paper RWP 06-08, Federal Reserve Bank of Kansas City.
- McDonald, Bruce D. & Miller, D. Ryan, 2010. "Welfare programs and the state economy," Journal of Policy Modeling, Elsevier, vol. 32(6), pages 719-732, November.
- Partridge, Mark D. & Rickman, Dan S., 2012. "Integrating regional economic development analysis and land use economics," MPRA Paper 38291, University Library of Munich, Germany.
- Decker, Christopher S. & Thompson, Eric C. & Wohar, Mark E., 2009. "Determinants of State Labor Productivity: The Changing Role of Density," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 39(1).
- Thompson, Eric C., 2007. "Measuring the Impact of Tourism on Rural Development: An Econometric Approach," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 37(2).
- McPhail, Joseph E. & Orazem, Peter & Singh, Rajesh, 2010. "The Poverty of States: Do State Tax Policies Affect State Labor Productivity?," Staff General Research Papers 31552, Iowa State University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Chapman).
If references are entirely missing, you can add them using this form.