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The Impact of Local Decentralization on Economic Growth: Evidence from U.S. Counties

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  • Hammond, George W.

    (West Virginia University)

  • Tosun, Mehmet S.

    (University of Nevada, Reno)

Abstract

We analyze the impact of fiscal decentralization on U.S. county population, employment, and real income growth. Our findings suggest that government organization matters for local economic growth, but that the impacts vary by government unit and by economic indicator. We find that single-purpose governments per square mile have a positive impact on metropolitan population and employment growth, but no significant impact on nonmetropolitan counties. In contrast, the fragmentation of general-purpose governments per capita has a negative impact on employment and population growth in nonmetropolitan counties. Our results suggest that local government decentralization matters differently for metropolitan and nonmetropolitan counties.

Suggested Citation

  • Hammond, George W. & Tosun, Mehmet S., 2009. "The Impact of Local Decentralization on Economic Growth: Evidence from U.S. Counties," IZA Discussion Papers 4574, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4574
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    More about this item

    Keywords

    employment; population; nonmetropolitan; metropolitan; fiscal decentralization; income; spatial econometrics;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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