The purpose of this paper is to outline barriers to public-sector entrepreneurship and explore the impact of those barriers on population shifts within the USA.
This paper lays out five specific barriers to public-sector entrepreneurship: barriers to entry and exit for consumers and producers, increased centralization and concentration in government, the lack of residual claim amongst public-sector actors, the rise of public-sector union membership and increasingly uncompetitive elections. The paper then assesses the impact of each of these barriers on population and production changes within the USA from 2010 to 2017.
Those state governments with limited barriers for productive public-sector entrepreneurship are rewarded with faster growing populations. Specifically, states with higher incomes, less centralized spending, lower public-sector unionization rates and higher state credit ratings tend to experience the greatest levels of population growth. States with less centralized spending also experience the largest increases in gross state product per capita.
This paper offers practical applications for policy makers wishing to increase their tax bases, increase the standard of living for their constituents or increase the efficiency in production and distribution of government goods and services. In particular, this paper offers evidence that an improved credit rating carries the most economic significance for population gains.
To the best of the authors’ knowledge, this is the first paper to examine Tiebout effects from barriers to public-sector entrepreneurship in the USA. Researchers in fields including political science, economics, management and public policy have all contributed to our understanding of public entrepreneurship. And yet, there are still numerous barriers preventing productive public-sector entrepreneurship from occurring at an optimal level.
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