Local decentralization and local economic growth: A cross-sectional examination of US metropolitan areas

Abstract

This paper builds on the growing empirical literature that explores the relationship between government structure and economic growth. It uses a new data set of 314 US metropolitan areas to examine the relationship between local decentralization and local economic growth. The results indicate a negative relationship between the central-city share of metro area population and economic growth and a positive relationship between both the number of municipalities per 100,000 residents and the number of counties per 100,000 residents and economic growth. Those findings provide support for the hypothesis that decentralization enhances economic growth.