Economic Effects of State‐Level Tax and Expenditure Limitations

As a result of devolution, state governments have taken on greater responsibility for financing and providing public services. Increasingly, states have adopted state‐level tax and expenditure limitations (TELs) to manage the growth and size of state budgets. The adoption of TELs is supported by claims that they have a positive effect on state economies, although such claims lack empirical evidence and have been contested by several scholars. Despite the ongoing debate about validating the actual economic effects of state‐level TELs, there is a lack of empirical assessments of their effects. The empirical results of this article indicate that the presence of state‐level TELs has a negative effect on the level of employment but no effect on the state's personal income per capita. The presence of state‐level TELs has no effect on either the growth of personal income per capita or the growth of employment.     

Implications of the ‘bread and peace’ model for the 2008 US presidential election

Presidential election outcomes are well explained by just two objectively measured fundamental determinants: (1) weighted-average growth of per capita real personal disposable income over the term, and (2) cumulative US military fatalities owing to unprovoked, hostile deployments of American armed forces in foreign conflicts. The US economy weakened at the beginning of 2008 and average per capita real income growth probably will be only around 0.75% at Election Day. Moreover cumulative US military fatalities in Iraq will reach 4,300 or more. Given those fundamental conditions, the Bread and Peace model predicts a Republican two-party vote share centered on 48.2%.     

Bread and the attrition of power: Economic events and German election results

Aggregate votes for incumbent parties in post-war Germany were determined by the weighted-average growth of real per capita disposable income. Each percentage point of per capita real disposable income growth sustained over the legislative term yielded approximately two percentage points of votes in Germany. No other economic variables add value or significantly perturb the coefficients of our model. However, attrition of power reduced the vote share in election years 1961, 1994 and 1998.     

On the (relative) unimportance of a balanced budget

This paper explores the reasoning underlying Milton Friedman's preference for a small, unbalanced budget over a large, balanced one. Because the marginal return from government spending is less than the marginal cost (measured in terms of the amount of income private individuals remain free to spend), government expenditures have more of an adverse impact on the economy in his view than does the method of financing that spending. Using a panel data set comprising the 50 states plus the District of Columbia, we report evidence from the years 1967 through 1992 that growth rates in income per capita tend to be higher in states with smaller public sectors. Moreover, we find that while both deficits and taxes reduce the rate of income growth in a state, the negative impact of government spending is considerably larger at the margin.     

Using Panel Data to Determine the Effect of the Americans with Disabilities Act on Per‐Student Public Education Expenditures at the State Level

The purpose of the present study is to determine whether passage of the American with Disabilities Act (ADA) in 1990 resulted in a statistically significant increase in per‐student public education expenditures at the state level. Although numerous studies have estimated educational cost functions, no prior study has examined the impact of the ADA on per capita education spending. The results of the present study are consistent with anecdotal evidence in that enactment of the ADA has had a positive effect on per‐student educational expenditures; this result suggests that legislative mandates may lead to increased government spending. In addition to the ADA, several of the leading determinants of per‐student education spending include population density, per capita income, percentage of the state that is over the age of 65, percentage of state's residents who have a four‐year college degree, percentage of state's residents who are homeowners, and total student population.     

Debt,democratization, and development in Latin America: How policy can affect global warming

The environmental Kuznets curve (EKC) hypothesis conjectures a nonlinear relationship between pollution and economic growth, such that pollution per capita initially increases as countries economically develop, but then reaches a maximum point before ultimately declining. Much of the EKC literature has focused on testing this basic hypothesis and, in studies that find evidence of an EKC, estimating the “turning point” level of development at which the per capita pollution‐growth relationship changes sign. This approach has not emphasized the policy relevance of specification issues or the potential role of policy variables. This research explores a modified EKC specification which conditions the pollution‐growth relationship on a country's level of debt and degree of democratization. These variables turn out to be significant, implying that different political and economic contexts can shift EKCs and their turning points. These findings suggest that policies to relieve debt burdens and institute political reform, in addition to their usual justifications, also could be used as a strategy to reduce carbon emissions from developing countries. © 2008 by the Association for Public Policy Analysis and Management.     

The relationship between corruption and income inequality in U.S. states: evidence from a panel cointegration and error correction model

We investigate the causality between corruption and income inequality within a multivariate framework using a panel data set of all 50 U.S. states over the period 1980 to 2004. The heterogeneous panel cointegration test by Pedroni (Oxf. Bull. Econ. Stat. 61:653–670, 1999; Econom. Theory 20:597–627, 2004) indicates that in the long run corruption and the unemployment rate have a positive and statistically significant impact on income inequality while a negative impact is found for real personal income per capita, education, and unionization rate. The Granger-causality results associated with a panel vector error correction model indicate both short-run and long-run bidirectional causality between corruption and income inequality.     

The shadow economy and sustainable development: The role of financial development

This paper provides fresh evidence concerning the threshold relationship between the shadow economy and financial development. Shadow economy is quoted as an obstacle to sustainable development and therefore the role of financial development is examined in this paper to tackle the issue of shadow economy. It is based on panel data of 29 developed and developing countries over the period of 1975–2015 and use of panel threshold model. Three proxies for financial development—liquid liabilities, private credit to deposit money banks, and stock market capitalisation—were utilised to obtain the threshold value of US$33,600 Gross Domestic Product (GDP) per capita. This threshold helps to determine the impact of financial development on the size of the shadow economy. Empirical results suggest that above this threshold, financial development significantly contributes to the reduction in size of the shadow economy while it has no impact for countries that have per capita income below this threshold. This implies that, countries with lower per capita income (below $33,600) should implement policies to improve accessibility to finance and credit market which leads to a sufficiently higher per capita income that in turn allows for a reduction in the size of the shadow economy.     

Incomes of the aged and nonaged, 1950-82

This article discusses the results of previous studies, both supportive and nonsupportive of the conclusion that the aged are as well-off as the nonaged, and then presents a range of figures from Bureau of the Census reports over the period 1950-82 that measure both the incomes of the aged and nonaged and those of subgroups within these populations. Census figures indicate that the aged and nonaged have about equal levels of average per capita family income and that about the same proportions of these groups have incomes below the poverty line. However, aged unrelated individuals, who account for about a third of all aged persons, have less than three-fifths the income of nonaged unrelated individuals. When the per capita family income of the aged is compared separately with that of families headed by persons aged 25-44 and 45-64, aged persons receive more than those under age 45 but less than those aged 45-64. Trends in the economic status of the aged and nonaged over the period 1950-82 indicate numerous fluctuations rather than a consistent improvement in the income of either group in relation to the other.     

The challenge of our declining big cities

Abstract

This article describes the population forces that caused U.S. metropolitan areas to grow rapidly after 1940 but caused falling population in many large older cities. It shows why the basic processes that generated the spatial growth and development of American metropolitan areas have also undermined the fiscal strength of many older central cities and inner‐ring suburbs. By concentrating low‐income households in inner‐core neighborhoods, these processes create undesirable conditions that motivate economically viable households and firms to move to surrounding suburbs and not move back.

Three strategies have been suggested for improving these conditions: major structural reform of metropolitan institutions, limited reform of big‐city governments, and community development of inner‐core areas. The first is the most capable of changing the dynamics causing decline, but it lacks political support because it would require the majority of metropolitan residents to sacrifice some benefits they gain from existing arrangements.     

Federal legislative activism in Australia: a new approach to testing Wagner’s law

This paper considers the relationship between government growth and real GDP per capita by developing models of federal legislative output in Australia since 1901. Growth in legislation is found to be negatively related to growth in real income per capita in the short-run, implying that legislation responds to temporary economic shocks, but without a robust long-run relationship with the level of income. The growth in the number of pages of legislation enacted and legislative complexity also show a negative short-run relationship with growth in real national income per capita and a positive long-run relationship with the level of income.     

On the Dynamics of Ethnic Fractionalization

Does fractionalization change over (short periods of) time? If so, are there any substantial implications for economic performance? To answer such questions, we construct a new panel data set with measures of ethnic, linguistic, and religious fractionalization for 26 former communist countries covering the period from 1989 to 2002. Our fractionalization measures show that transition economies became more ethnically homogeneous over such a short period of time, although the same did not happen for linguistic and religious diversity. In line with the most recent literature, there seems to be no effect of (exogenous) diversity on macroeconomic performance (that is, on per capita GDP growth). However, we find that dynamic (endogenous) ethnic diversity is negatively related to growth (although this is still not the case for linguistic and religious diversity). These findings are robust to different specifications, polarization measures, and instrument sets as well as to a composite index of ethnic‐linguistic‐religious fractionalization.     

Housing needs and effective policies in high‐tech metropolitan economies

Abstract

What are the most effective ways to provide low‐income housing to those left behind in new economy housing markets? Do winners and losers in high‐tech competition require federal housing strategies geared to metropolitan differences? This article examines 45 large metropolitan areas grouped along a high‐tech spectrum to see who is dis‐advantaged and to deduce effective local low‐income housing strategies from market characteristics.

Finding affordable housing was, on average, more difficult for low‐income renters and owners in high‐tech economies in the 1990s. Nonetheless, high‐tech metropolitan economies, like other local/regional markets, vary greatly. Sharp differences among and within metropolitan markets make it essential that federal strategies allow local policies to respond to local conditions. To most effectively provide low‐income housing to those left behind in all markets, federal policy should target sufficient resources to severe housing needs through many more vouchers and programs that permit and encourage effective local choices.     

How fair? Changes in federal income taxation and the distribution of income, 1978 to 1998

In this paper, we determine how tax law and income distribution changes have separately contributed to the changes in tax progressivity over time, and also how a specific pre‐tax distribution of income affects the equalizing ability of a given tax change. We use information from the Current Population Survey for years that follow immediately after significant tax law changes or after the full enactment of these changes to measure the effect of income taxes on income distribution for selected years over the period 1978 to 1998. We find that, even when account is taken of the induced effect of changes in federal income tax laws on pre‐tax income, the individual income tax structure has been less successful in equalizing after‐tax income since the 1980s and into the early 1990s. We also find that a given tax law's equalizing effect on the distribution of income is significantly affected by the pre‐tax distribution of income. © 2005 by the Association for Public Policy Analysis and Management.     

The retention of state governors

In this paper, we have provided some support for several hypotheses about the determinants of which governors get reelected. The benefit from being a member of a particular party varies from state to state and from year to year. Personal characteristics such as age are also important. The logits give some support to the importance of coalition formation; reelection is easier in states with low voter turnout and in farm states. The paper is most concerned with the connection between the economic performance and the electoral success of incumbent candidates for governor, and we find support for a model of electoral acountability, in which governors are powerful in state governments and state governments have the ability to differentially tax fixed factors relative to neighboring states.This paper raises some important issues regarding the measurement of variables in political economy, which have wide applicability to other studies in the economics of politics. Peltzman (1988) finds that the difference between the growth rate in state personal income and the national growth rate over a one to four year period prior to the election does not affect gubernatorial electoral outcomes. Concurrently, we find that the current year's growth rate in state personal income and its difference from the national growth rate are not significantly related to electoral success but that the average deviation from predicted state personal income during the governor's tenure in office is significantly related to the odds of getting reelected. That is, the data reject simplistic views of voter behavior and support a sophisticated model of voter behavior. Similarly, Peltzman (1988) has greater success using more sophisticated, cumulative measures of national economic performance.     

Interstate migration,income and public school expenditures: An update of an experiment

This article re-examines the relative importance of per capita income and net out-migration (Weisbrod's welfare-maximization hypothesis) as determinants of expenditures for public primary and secondary education. A repetition of Weisbrod's experiment shows that the existence of a high correlation between per capita income and migration in the 1950s would have made it difficult to distinguish between their relative importance. An update of the experiment yields results contrary to the hypothesis that communities (states) are welfare maximizers. They support the contention that per capita income is a primary determinate of educational expenditures.     

An investigative research on the status of urban residents' psychological security

The objective of this study was to investigate the status of the psychological security of 224 urban residents by using a self‐made questionnaire. The results show that the overall psychological security of urban residents is in the medium–low level. There are significant differences among residents with education background or with household per capita monthly income (F = 4.192, F = 4.545, p < 0.05). People with high psychological security scores are highly educated or come from families with high per capita monthly income. In regards to the factors of common sense of security, the results show significant differences (F = 4.98, p < 0.01) among people with different educational background and people with bachelor's degrees or above scores higher than less‐educated people (from high school or community college). In regards to the factors of certainty feeling, there are significant variations among people with genders and economic background (F = 11.28, F = 7.75, p < 0.01), males higher than females, while people with per capita monthly income of more than 2000 RMB feel more certainty than those with less than 2000 RMB. On the sense of calmness, factors such as education and family per capita income significantly affected scores (F = 4.67, p < 0.05, F = 5.20, p < 0.01). People with high school degree feel less calm than those with college degree or above; individuals with per capita monthly income of 2000 RMB feel less calm than those with income higher than 2000 RMB of above. For another dimension, the sense of relaxation, there is a significant difference among different age groups (F = 8.92, p < 0.001, groups below 40 scoring higher than groups over 40). Copyright © 2014 John Wiley & Sons, Ltd.     

Education and economic growth in the United States: cross-national applications for an intra-national path analysis

Do the leading predictors of economic growth found in the cross-national research have a capacity to predict economic growth at the state level in the United States (US)? Are the effects of education spending on economic growth underestimated because research fails to examine the indirect effects of spending on economic growth? This article presents the findings from a study investigating the relationship between education and economic growth in US states while controlling for the effects of the leading predictors of economic growth from the cross-national research. It also utilizes a path model to examine direct and indirect relationships between education spending and economic growth measured as per capita income growth. The results indicate that spending on higher education and highway expenditures demonstrate a positive association with growth in per capita income, while K12 (kindergarten through 12th grade) spending and K12 pupil–teacher ratios demonstrate a negative association with income growth from 1988 to 2005. Moreover, K12 spending and population growth indirectly affect income growth through their relationship with K12 pupil–teacher ratios, and spending on higher education indirectly affects income growth through college attainment rates. Overall, all but one variable from the cross-national research demonstrates a significant direct or indirect relationship with income growth during at least one time-period investigated. Treating K12 pupil–teacher ratios and college attainment as mediating variables also enhances our understanding of the dynamics that explain growth in per capita income at the sub-national level in the US. However, some unexpected findings emerge when the data are analyzed on the basis of two eight-year sub-periods.     

Gasoline prices and motor vehicle fatalities

Fatal motor vehicle crashes per capita remained relatively stable over the 1990s, in spite of new traffic safety laws and vehicle innovations. One explanation for this stability is that the price of gasoline declined, which resulted in more vehicle miles traveled and potentially more fatalities. By using 1983–2000 monthly gasoline price and fatality panel data and fixed effects specifications, this study exploits within‐state variation over time in gasoline prices and found that a 10‐cent decrease in gasoline prices increased motor vehicle fatalities by 2.3 percent over a 2‐year period. The effect on higher‐risk younger adults is more than twice as large. The secular decline in real gasoline prices over the 1990s may partially explain why motor vehicle fatalities per capita have not decreased even with the adoption of more stringent state policies. © 2004 by the Association for Public Policy Analysis and Management.     

Federal colonias policy in California: Too broad and too narrow

Abstract

This article presents data on the 50 largest metropolitan areas in the United States to compare the metropolitan population density in the eastern and western parts of the country. The data show that the West often has more densely settled metropolitan areas than the East, especially when compared with the Southeast. The difference is due in part to the arid and rugged environment in the West.

The article also develops a new understanding of Sunbelt development by comparing its eastern and western halves. The growth patterns of the Sunbelt are often contrasted with those of the Northeast and Midwest, the assumption being that its newer metropolitan areas share a common, lower‐density urban form. However, this study shows that intraregional differences within the Sunbelt make such comparisons difficult and deceptive.