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State‐level austerity, education, and large urban labor markets: Evidence from fiscal policy experiments in Kansas and Wisconsin
Author(s) -
Komarek Timothy M.
Publication year - 2020
Publication title -
growth and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.657
H-Index - 55
eISSN - 1468-2257
pISSN - 0017-4815
DOI - 10.1111/grow.12370
Subject(s) - austerity , earnings , workforce , economics , state (computer science) , harm , fiscal imbalance , labour economics , fiscal policy , political science , economic growth , fiscal union , finance , macroeconomics , algorithm , politics , computer science , law
In 2011, Kansas and Wisconsin experimented with fiscal austerity policies. Proponents of the tax and public expenditure cuts argued that they would spur economic growth, while opponents claimed that it would harm vulnerable populations. I use the timing of these policies and the synthetic control method to examine how state‐level austerity affected earnings per worker for high and low education segments of the workforce in major urban areas. The results suggest that the Kansas and Wisconsin fiscal experiments hurt low education workers in some urban areas. The estimates also show heterogeneity in the treatment effect. Notably, Madison, WI, was the only urban area that experienced substantial positive growth in both education segments.