Optimal municipal investment in boomtowns An empirical analysis |
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Authors: | Ronald G Cummings William D Schulze Arthur F Mehr |
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Affiliation: | 1. Department of Economics, University of New Mexico, Albuquerque, New Mexico, 87131, USA;2. Department of Economics, University of Southern California, Los Angeles, California 90007, USA |
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Abstract: | The primary concern of this paper is the use of wage-infrastructure trade-offs as a measure for the social benefits of municipal infrastructure in boomtowns. A regression based on pooled cross sectional and time series data for 26 towns in the Rocky Moutain region suggests that individuals will “trade off” a 1% increase in per capita stocks of municipal infrastructure for a 0.035% decline in wages. These results are then used to calculate “optimal” levels of infrastructure investment for an example boomtown. |
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