IS PUBLIC EXPENDITURE PRODUCTIVE? EVIDENCE FROM THE MANUFACTURING SECTOR IN U.S. CITIES, 1880-1920.

The article explores the relationship between public expenditure and labor productivity in the manufacturing sector of municipalities in the U.S. between 1880 and 1920. The authors assert that the time period was one of rapid industrialization in larger cities, including high production growth and public infrastructure spending. The authors conclude that public expenditure by local governments had no significant economic impact on the labor productivity during the time period. It is the authors' opinion that efforts by the federal government to increase labor productivity in the 21st century through increased spending on infrastructure projects at local levels will not be effective, and that maintaining a low tax burden at the municipal level would be a more effective economic strategy.