The impact of labor costs on municipal finances

William Hunter

Public Choice, 1982, vol. 38, issue 2, 139-147

Abstract: This study has clearly confirmed a link between the amount of compensation a city pays its workers and the financial stability of that city. The more a municipality pays its workers relative to other local governments, the greater the chance that city will experience fiscal stress. The institutions which lead to this condition remain unknown and much more work is needed if the problems of local government financing are to be resolved. Certainly the relationship between municipal labor unions and city finances must be closely examined. It is quite possible that these unions may have direct and adverse affects on local government finances. Tax structure is also an important factor in determining financial stability. Perhaps conventional tax theory should be augmented or even replaced with new criteria for fiscal stability. This seems to be of great practical importance for local government taxation since their populations are so mobile. Copyright Martinus Nijhoff Publishers 1982

Date: 1982
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DOI: 10.1007/BF00127715

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