Economic growth among a cross-section of municipalities

Abstract

Our work builds on the analysis of municipal population and income growth over the 1960-90 period presented by Glaeser et al. [Journal of Monetary Economics, 36, 1, August, 1995, pp. 11743]. We examine a broader sample of 600 U.S. municipalities and investigate differences in the growth experiences of larger and smaller cities and of wealthier and poorer cities. The results confirm the robustness of the conclusions of Glaeser et al. that municipal population and income growth are: 1) positively correlated with the initial level of educational attainment in the municipality; 2) negatively correlated with the initial municipal unemployment rate; and 3) negatively correlated with the initial share of municipal employment in manufacturing. Additionally, we find some evidence of convergence across cities in levels of population and per capita income and we introduce municipal annexation activity as an additional institutional determinant of municipal growth. Our results suggest that annexation has been an important source of population and income growth for U.S. municipalities over the 1960-90 period. This finding adds another dimension to the literature on the determinants and consequences of municipal annexation activity and suggests that annexation activity should not be ignored in analyses of municipal economic development.