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The Effect of State Economic Development Agency Spending on State Income and Employment Growth

Author

Listed:
  • Ernest P. Goss

    (Creighton University)

  • Joseph M. Phillips

    (Creighton University)

Abstract

This study investigates the effect of state economic development (ED) agency spending on state income and employment growth using data from the 1986-1994 period. The study finds that ED spending has a modest positive effect on the generation of state income and employment, even after controlling for the negative effect of collecting taxes to fund ED spending. It is estimated that a doubling of state ED spending (on average $71.5 million in 1992)funded by an increase in taxes would raise the yearly average employment growth rate by 0.16% (from 1.52% to 1.68%) and the yearly average per capita income growth rate by 0.22% (from 4.07% to 4.29%). The study also finds that ED spending interacts with state and local taxes, so that the negative effect of taxes on economic growth is underestimated when ED spending is omitted from the analysis.

Suggested Citation

  • Ernest P. Goss & Joseph M. Phillips, 1997. "The Effect of State Economic Development Agency Spending on State Income and Employment Growth," Economic Development Quarterly, , vol. 11(1), pages 88-96, February.
    • Handle: RePEc:sae:ecdequ:v:11:y:1997:i:1:p:88-96
    DOI: 10.1177/089124249701100107
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    Cited by:

    1. Patrick, Carlianne, 2016. "Jobless capital? The role of capital subsidies," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 169-179.
    2. Susan E. Cozzens & Kamau Bobb, 2003. "Measuring the relationship between high technology development strategies and wage inequality," Scientometrics, Springer;Akadémiai Kiadó, vol. 58(2), pages 351-368, October.
    3. Carlianne Patrick, 2014. "The economic development incentives game: an imperfect information, heterogeneous communities approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 137-156, August.
    4. Carlianne Patrick, 2014. "Does Increasing Available Non-Tax Economic Development Incentives Result in More Jobs?," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(2), pages 351-386, June.
    5. Xiaobing Shuai, 2015. "Do Economic Development Efforts Benefit All? Business Attraction and Income Inequality," The Review of Regional Studies, Southern Regional Science Association, vol. 45(1), pages 35-56, Spring.

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