Public Infrastructure: Pork or Jobs Creator?

Abstract

Past studies of the impact of public capital on state economic well-betng have often focused on estimates of productton functions, yet such an approach overlooks some important economic relationships. This article presents estimates designed to care fully measure the impact of public capital on state employment by using a model that incorporates infrastructure impacts from several different sources Controlling for differences in states' industrial structure, demand conditions, production costs, demographics, and noninfrastructure amenities and state fixed effects, the authors find that infrastructure is a significant variable in determining state employment. Moreover, surrounding state highway public capital apparently has positive spillover impacts. Finally, a simulation is conducted to examine whether a govern ment policy of raising taxes to fund an increase in public infrastructure increases employment.