This research examines the effects of local expenditures on income growth in North Carolina counties. Pooled data from all 100 counties in the state for the years 1981-1990 are analyzed, and empirical tests are conducted to ascertain the relationship between the expenditures and the effect on the dependent variable under a number of time lags The most important finding is that county paved-highway mileage per capita has a significant positive effect on income growth under a number of model specifications. In addition, there is a consistently positive relationship between county per student spending for primary and secondary education and income growth that obtains statistical significance under some model specifications. The findings also indicate that change in county income growth is heavily affected by state income growth.
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