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Workers' Compensation Costs And Regional Growth Dynamics

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  • Martin Williams
  • Paul Graeser

Abstract

This paper attempts to gauge the effect of workplace regulation, against the background of other influences, on the increasing or decreasing competitive advantage of particular regions relative to the nation. We employ two measures of regional growth. The first is the differential rate of investment growth across states between 1978 and 1984. The results for output growth show that states both in the South and outside the South stand to lose their competitive edge in manufacturing activity from rising unit labor cost and energy cost. Rising taxes hurt industrial activity in the North but are not critical in the South. Agglomeration economies that benefit the North, apparently have no detrimental effect in the South. Rising workers' compensation cost is significant in the decline in southern competitiveness; it is not in the North. Both regions enhance their competitive position when local markets grow. For regional manufacturing investment, we find that unit labor cost and energy cost have no significant effect on the competitive position of states in the South. However, taxes and workers' compensation costs hurt investment opportunities in South.

Suggested Citation

  • Martin Williams & Paul Graeser, 1992. "Workers' Compensation Costs And Regional Growth Dynamics," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 4(1), pages 67-83, January.
    • Handle: RePEc:bla:revurb:v:4:y:1992:i:1:p:67-83
    DOI: 10.1111/j.1467-940X.1992.tb00034.x
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