Bureaucracy, Infrastructure, and Economic Growth: Evidence from U.S. Cities During the Progressive Era

24 Pages Posted: 20 Jul 2000 Last revised: 5 Aug 2022

See all articles by James E. Rauch

James E. Rauch

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: December 1994

Abstract

Recent work in the sociology of economic development has emphasized the establishment of a professional bureaucracy in place of political appointees as an important component of the institutional environment in which private enterprise can flourish. I hypothesize that establishment of such a bureaucracy will lengthen the period that public decision makers are willing to wait to realize the benefits of expenditures, leading to allocation of a greater proportion of government resources to long-gestation period projects such as infrastructure. This hypothesis can be tested using data generated by a `natural experiment' in the early part of this century, when a wave of municipal reform transformed the governments of many U.S. cities. Controlling for city and time effects, adoption of Civil Service is found to increase the share of total municipal expenditure allocated to road and sewer investment. Other estimates imply that this increased share raises the growth rate of city manufacturing employment by one-half percent per year.

Suggested Citation

Rauch, James E., Bureaucracy, Infrastructure, and Economic Growth: Evidence from U.S. Cities During the Progressive Era (December 1994). NBER Working Paper No. w4973, Available at SSRN: https://ssrn.com/abstract=226572

James E. Rauch (Contact Author)

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