The Changing Determinants of State Expenditure in the United States: 1965–1992

Abstract

This study builds upon the literature on state government expenditure in the United States. the innovation in this study is twofold. First, we highlight the importance of demographic factors in driving state budgets. Second, we control for the presence of state specific effects that may be important in determining the preferences of the citizenry. We find that a number of economic and institutional factors are important determinants of expenditure, and that higher spending is associated with governments that are dominated by a single party. the largest changes over the period concern education and corrections spending, with the number of children of either primary or secondary school age becoming a less important determinant of expenditure, and the number of prisoners and college age students becoming an important positive determinant of expenditure.