On the Relationship Between Mobility, Population Growth, and Capital Spending in the United States

Marco Bassetto and Leslie McGranahan

No 16970, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper, we investigate the relationship between public capital spending and population dynamics at the state level. Empirically, we document two robust facts. First, states with faster population growth do not spend more (per capita) to accommodate the needs of their growing population. Second, states whose population is more likely to leave do tend to spend more per capita than states with low gross emigration rates. To interpret these facts, we introduce an explicit, quantitative political-economy model of government spending determination, where mobility and population growth generate departures from Ricardian equivalence by shifting some of the costs and benefits of public projects to future residents. The magnitude of the empirical response of capital spending to mobility is at the upper end of what can be explained by the theory with a plausible calibration. In the model, more mobile voters favor more spending because the maturity of states' debt is very long term and costs are shifted into the future more than benefits.

JEL-codes: E62 H41 H71 (search for similar items in EconPapers)
Date: 2011-04
New Economics Papers: this item is included in nep-dge, nep-geo, nep-mac, nep-mig and nep-pbe
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.nber.org/papers/w16970.pdf (application/pdf)

Related works:
Working Paper: On the Relationship between Mobility, Population Growth, and Capital Spending in the United States (2010)
Working Paper: On the relationship between mobility, population growth, and capital spending in the United States (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:16970

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w16970

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().