Local Government Structure and Poverty in U.S. Metropolitan Areas

Abstract

This study tackles a question largely neglected in the debate in economics about local government structure: What impact does the structure of government have on poverty? Using data from the 2000 Census and the 2002 Census of Governments for 331 Metropolitan Statistical Areas, I model the poverty rate as a function of government structure and other factors and test how the structure of government in U.S. metropolitan areas affects poverty rates. I find that as the number of general-purpose governments per 100,000 population increases, the poverty rate increases. These results offer some support for the conclusion that having more local governments leaves low-income households behind and also present a potential downside to Tiebout’s solution for the provision of public goods.