Who Benefits from State and Local Economic Development Policies?

by Bartik, Timothy J.

• ISBN13: 9780880991131
• ISBN10: 0880991135
• Format: Paperback
• Copyright: 1991-08-01
• Publisher: W E Upjohn Inst for

Table of Contents

Boon or Boondoggle? The Debate Over State and Local Economic Development Policies	p. 1
Focus on Local Economies	p. 2
What is Economic Development Policy?	p. 3
Jobs Versus Other Goals of Economic Development Policies	p. 6
Do State and Local Economic Development Policies Affect Growth?	p. 7
Does Local Growth Help the Unemployed and Lower-Income Households?	p. 9
Can State and Local Economic Development Policies Benefit the National Economy?	p. 12
Is the Glass Half-Full or Half-Empty?	p. 14
Organization of the Book	p. 14
Notes	p. 15
Can State and Local Policies Affect Economic Development?	p. 17
Evaluations of Specific Programs	p. 18
Survey Evidence on the Influence of State and Local Policies	p. 26
The Case Study Approach	p. 28
Econometric Studies of State and Local Policies and Business Growth	p. 30
Methodological and Data Issues in Business Location Modeling	p. 30
Taxes	p. 36
Public Services	p. 44
Wages	p. 49
Unionization	p. 52
Environmental Regulations	p. 54
Capital Market Imperfections	p. 57
Conclusion	p. 57
Notes	p. 58
Theoretical Analysis of the Distributional Effects of Local Job Growth	p. 63
Immobility of Labor	p. 64
Short-Run Effects of Local Job Growth	p. 66
Long-Run Effects of Growth	p. 71
Long-Run Costs of Growth	p. 73
Hysteresis Effects of Local Job Growth	p. 76
Conclusion	p. 78
Notes	p. 79
Effects of Local Job Growth on Unemployment, Labor Force Participation, and Weekly Hours	p. 81
Previous Research on Local Growth and Unemployment	p. 81
New Estimates of the Effects of Local Job Growth	p. 88
Effects of Growth Shocks in Slow- and Fast-Growth Areas	p. 97
Effects of Local Job Growth on Different Groups	p. 98
Job Growth Versus Other Policies	p. 103
Some Speculative Extensions to the Research Findings	p. 107
Conclusion	p. 108
Notes	p. 108
Effects of Local Job Growth on Housing Prices and Other Prices	p. 113
How Local Growth Affects Prices	p. 114
Review of Previous Empirical Research	p. 114
Effects of GM's Announcement of the Saturn Plant on Land Prices	p. 118
New Econometric Research on Local Growth and Housing Prices	p. 119
Effects of Local Growth on Nonhousing Prices	p. 129
Are Effects on Housing and Land Prices Large?	p. 131
Conclusion	p. 132
Notes	p. 133
Effects of Local Job Growth on Real Wages	p. 137
Real Wage Definitions and Growth	p. 137
Previous Studies of Growth and Wages	p. 140
Model and Data Used in this Chapter	p. 142
New Estimates of the Effects of Growth on Real Wages	p. 146
Growth Effects on Real Wages Across Different Groups	p. 153
Conclusion	p. 153
Notes	p. 155
Effects of Economic Development Policy on Individual Earnings, Income Distribution, and Economic Efficiency	p. 157
Effects of Local Growth on Real Earnings	p. 157
Previous Research on Local Growth and Earnings	p. 158
New Estimates of Local Growth Effects on Earnings	p. 160
Consistency With Results of Previous Chapters	p. 165
Effects of Local Growth on Earnings By Demographic Group	p. 167
Effects of Economic Development Policy on Income Distribution	p. 171
Local Growth and the Earnings Distribution	p. 172
Property Value Effects	p. 175
Distributional Effects on Family Income vs. Male Earnings	p. 176
Economic Development and Lower-Income Households	p. 176
Growth Effects on Individuals vs. Income or Earnings Groups	p. 177
Net Efficiency Effects of Economic Development Policy	p. 178
Conclusion	p. 184
Notes	p. 186
Is State and Local Economic Development Policy a Zero-Sum Game?	p. 187
The Easy Argument: Encouraging Productivity is not a Zero-Sum Game	p. 188
Is Redistributing Jobs a Zero-Sum Game?	p. 190
Reservation Wages and Local Unemployment	p. 193
Which Areas Pursue Economic Development?	p. 194
Does State and Local Competition Increase National Growth?	p. 196
Does State and Local Competition Affect the National Income Distribution?	p. 199
Conclusion	p. 201
Notes	p. 201
Conclusion: People and Places	p. 205
Summary of Major Findings	p. 205
State and Local Policies Affect Local Growth	p. 205
Local Growth Has Long-Run Labor Market Effects	p. 205
Faster Local Growth Helps Blacks and Less-Educated Individuals	p. 206
State and Local Economic Development Policy Is Not a Zero-Sum Game	p. 206
Implications for Public Policy	p. 207
Two Cheers for State and Local Economic Development Policy	p. 207
Labor Demand Matters	p. 208
Places and National Policy	p. 209
Notes	p. 211
Appendix 2.1 The Elasticity of State or Local Business Activity With Respect to Local Cost Variables Should Be Roughly Proportional to the Variable's Share in Costs	p. 213
Notes	p. 215
Appendix 2.2 Studies of Effects of State and Local Taxes on Business Activity	p. 216
Appendix 2.3 Studies of Effects of Public Services on Business Location	p. 248
Appendix 2.4 Studies of Wage Effects on Business Location	p. 254
Appendix 2.5 Studies of Effects of Unionization on Business Activity	p. 259
Appendix 3.1 Alternative Hysteresis Theories and Local Labor Markets	p. 262
Appendix 4.1 Local Labor and Land Market Variables as a Function of Demand-Induced Shocks to Local Employment	p. 265
Appendix 4.2 Specification of Estimating Evaluations and Econometric Issues	p. 269
Notes	p. 282
Appendix 4.3 Background Information on Data	p. 286
Appendix 4.4 Background Information on Empirical Results Used in Chapter 4	p. 292
Appendix 5.1 Background Information on Chapter 5 Results	p. 300
Notes	p. 301
Appendix 6.1 Background Information on Chapter 6 Results	p. 307
Appendix 7.1 Detailed Results for Real Earnings Regressions	p. 318
Appendix 7.2 Estimates of "Permanent" Real Earnings	p. 324
Appendix 8.1 Illustrative Arguments for Why State and Local Economic Development Policies May Provide National Employment Benefits	p. 325
Notes	p. 330
References	p. 331
Index	p. 347
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