The effects of fiscal decentralization on economic growth in United States counties.

摘要

This study investigates the effects of decentralization on economic growth in U.S. counties. Decentralization has given counties the added responsibility of economic growth and welfare administration. Counties use various strategies to attract and retain businesses so they can provide income and jobs for residents. Localization of economic development and decentralization of welfare programs may have an effect on economic growth of county governments. County governments in the U.S. may act strategically by setting lower welfare benefit levels, and offering business incentives to new and existing firms, thus resulting in the possible under-provision of local public services and a decrease in economic growth.; Key objectives of this study are to construct a measure of decentralization and investigate whether decentralization leads to differences in economic growth in U.S. counties. A simultaneous equation framework is used to explore the relationship between decentralization and economic growth. Economic growth is measured by population and employment growth. An interaction term is constructed between decentralization and rural status to verify whether decentralization's effects differ by rural status of counties.; County level data from forty-six states in the U.S. are used in the analyses. The hypothesis that the effect of decentralization on rural counties is different from that of urban counties is tested. The hypothesis that decentralization has a negative effect on economic growth of U.S. counties is also tested. Other hypotheses that are tested are that population growth and employment growth each has a positive effect on the other.; The results reveal that population and employment growth both positively affect each other. Decentralization has a significant effect on population growth but no effect on employment growth. Both rural and urban counties show a negative relation with population growth so the hypothesis that decentralization results in lower economic growth (in terms of population) is accepted. Since population decreases might have a stronger effect on the economy of rural counties, a spatial marginalization hypothesis is accepted with caution. Crime rates and population density have a significant effect on economic growth but amenities and income show no effect. All other variables show mixed effects on growth.