What drives road infrastructure spending?

Abstract

AbstractIt is widely believed that basic infrastructure in the United States has been seriously underfunded in recent years. We examine this broad issue by focusing on two specific questions. First, how has subnational government spending on infrastructure changed over the last half‐century, focusing especially on transportation spending? Second, what factors have driven these spending changes? To answer these questions, we collect data on local, state, and combined state and local government spending on roads and other expenditure categories from 1957 to 2013. With these data, we first demonstrate that infrastructure spending has increased on average in real per capita terms across all states, even while it has declined significantly across all states as a percentage of government spending. Second, we also examine empirically several causal factors that help explain what has driven these changes in transportation spending over time, using several estimation methods and robustness tests. We find suggestive evidence that it is primarily changes in government spending on welfare programs that have driven these sizeable changes in transportation spending. Indeed, we calculate that, if state governments were spending the same percentage of their budgets on transportation in 2013 as they had been in 1957, then state government spending on transportation across all states would increase in total by an additional $133.5 billion in 2013, an amount equal to an additional $422 per capita.