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Does urbanization mean bigger governments?

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  • Michael Jetter
  • Christopher F. Parmeter

Abstract

This paper proposes urbanization as a determinant of government size. As people move to cities, their demand for a more de ned set of regulations, but also for basic health, education, and income standards rises. Our theoretical framework determines how the regional distribution of the population a ects government size. We test this theory on panel data of 175 countries from 1960 to 2010 and two state-level samples from Colombia and Germany. Results demonstrate a strong positive e ect from urbanization on government spending, with a 1 percent increase in the amount of urban citizens leading to a 0.2 percent rise in public expenditure. Our ndings indicate that public sectors may become more important as worldwide urbanization is progressing. This result underlines why government e ectiveness and the quality of public goods provision will be even more important in the future.

Suggested Citation

  • Michael Jetter & Christopher F. Parmeter, 2013. "Does urbanization mean bigger governments?," Documentos de Trabajo de Valor Público 10730, Universidad EAFIT.
    • Handle: RePEc:col:000122:010730
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    File URL: http://repository.eafit.edu.co/bitstream/10784/744/1/2013_11_Michael_Jetter.pdf
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    Cited by:

    1. Jetter, Michael & Mösle, Saskia & Stadelmann, David, 2019. "Cursed by no coast: How regional landlockedness affects income within countries," Economics Letters, Elsevier, vol. 181(C), pages 70-73.
    2. Michael Jetter & Saskia Mösle & David Stadelmann, 2017. "Landlockedness and Economic Development: Analyzing Subnational Panel Data and Exploring Mechanisms," CESifo Working Paper Series 6733, CESifo.
    3. Muhammad Zakaria & Wen Jun & Arooj Khan, 2023. "Effects Of Capital Inflows On Fiscal Balance In An Emerging Economy: Evidence From Pakistan," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(05), pages 1585-1598, September.
    4. Fiorini, Luciana C. & Jetter, Michael & Parmeter, Christopher F. & Parsons, Christopher, 2020. "The Effect of Community Size on Electoral Preferences: Evidence From Post-WWII Southern Germany," IZA Discussion Papers 13724, Institute of Labor Economics (IZA).
    5. Lin Li & Kaixu Zhao & Xinyu Wang & Sidong Zhao & Xingguang Liu & Weiwei Li, 2022. "Spatio-Temporal Evolution and Driving Mechanism of Urbanization in Small Cities: Case Study from Guangxi," Land, MDPI, vol. 11(3), pages 1-34, March.

    More about this item

    Keywords

    Government Size; Urbanization; Population Concentration;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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