Regional policies and economic growth: One size does not fit all

Abstract

We analyze the impact of economic development policies and highway infrastructure improvements on growth of per capita income and jobs in Michigan counties. The policies considered for analysis have significant impact on growth outcomes. However, this effect is non-linear. Significant heterogeneity in policy effects is also detected. The impacts are different with respect to average income level in a county as well as between metropolitan and non-metropolitan areas. In addition, cross-policy effects are found. We use improved measurement of policy treatment while accounting for possible spillover effects.