Higher Education Spending is a Better Job Creator than State Tax Cuts

Aitbek Amatov and Jeffrey Dorfman ()

Journal of Agribusiness, 2015, vol. 33, issue 01

Abstract: By estimating employment elasticities of various state-level fiscal policies we find that state tax cuts are inefficient job creators, with an elasticity between 0 and -0.1, and lead to a deterioration in state budgets. In contrast, we find that more state government spending on higher education is approximately self-financing, creating enough additional jobs, and, thereby, tax revenue, to offset the higher spending. This suggests that states competing for business and wealthy cross-state migrants by offering low taxes are pursuing an inferior strategy compared to competing on a well-funded, high-quality state higher-education system.

Keywords: Agribusiness (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ags:jloagb:311375

DOI: 10.22004/ag.econ.311375

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