State and local policy, factor markets and regional growth

Stephen Brown, Kathy J. Hayes and Lori Taylor

No 202, Working Papers from Federal Reserve Bank of Dallas

Abstract: A large and growing literature to explain how state and local policies affect factor markets, firm location and economic growth has developed in three distinct threads. These threads have variously emphasized how policy and natural amenities affect regional economic growth or firm location; how variations in policy and natural amenities can lead to persistent wage differentials across regions; and how regional variation in factor inputs, including public capital, affects output. In this article, we expand the modeling framework of Roback and Gyourko and Tracy to integrate these threads into a single inquiry about how state and local policies?including the provision public capital?affects factor markets and economic growth. Using the model as the basis for estimation, we find that state and local policies have a more profound influence on the private capital-to-labor ratio in a region than on private output. Furthermore, the evidence suggests that the growth of government?either in the form of services or public capital?discourages private sector growth.

Keywords: Regional; economics (search for similar items in EconPapers)
Pages: 29 pages
Date: 2002
New Economics Papers: this item is included in nep-ure
Note: Published as: Brown, Stephen P.A. , Kathy J. Hayes and Lori L. Taylor (2003), "State and Local Policy, Factor Markets and Regional Growth," The Review of Regional Studies 33 (1): 40-60.
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Citations: View citations in EconPapers (4)

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