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State‐level austerity, education, and large urban labor markets: Evidence from fiscal policy experiments in Kansas and Wisconsin

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  • Timothy M. Komarek

Abstract

In 2011, Kansas and Wisconsin experimented with fiscal austerity policies. Proponents of the tax and public expenditure cuts argued that they would spur economic growth, while opponents claimed that it would harm vulnerable populations. I use the timing of these policies and the synthetic control method to examine how state‐level austerity affected earnings per worker for high and low education segments of the workforce in major urban areas. The results suggest that the Kansas and Wisconsin fiscal experiments hurt low education workers in some urban areas. The estimates also show heterogeneity in the treatment effect. Notably, Madison, WI, was the only urban area that experienced substantial positive growth in both education segments.

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  • Timothy M. Komarek, 2020. "State‐level austerity, education, and large urban labor markets: Evidence from fiscal policy experiments in Kansas and Wisconsin," Growth and Change, Wiley Blackwell, vol. 51(2), pages 556-583, June.
    • Handle: RePEc:bla:growch:v:51:y:2020:i:2:p:556-583
    DOI: 10.1111/grow.12370
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    1. Rickman, Dan S. & Wang, Hongbo, 2022. "Estimating the Economic Effects of US State and Local Fiscal Policy: A Synthetic Control Method Matched Regression Approach," MPRA Paper 112575, University Library of Munich, Germany.

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