Pork-Barrel Spending and State Employment Levels: Do Targeted National Expenditures Increase State Employment in the Long Run?

Abstract

A targeted national expenditure, also known as pork-barrel spending, is defined as federal project which is funded by the national tax base yet only benefits a small, localized population. Anecdotally, this type of spending is often criticized as short-sighted, inefficient and wasteful. This paper incorporates pork-barrel spending into existing research on the drivers of state economic growth to determine the role of pork-barrel spending on both state employment and gross state product. First, I find that many of the initial-year economic conditions that drive employment in MSAs also drive employment at the state-level. Second, I find that pork-barrel spending also influences employment levels, but the effect tends to be temporary. Specifically, for every one million dollars of pork-barrel appropriated by a state, total employment in the state increases by around 735 jobs in the year the funding is secured. However, less than 100 of those jobs remain the following year. This gives credibility to the argument that pork-barrel spending is used to support short-sighted political goals such as re-election. Finally, using a spatial lag model, I find that the benefits of pork-barrel spending do not spill across state lines providing evidence that pork-barrel spending only benefits a concentrated population.