Local authority fiscal policy and urban employment

An econometric model of the determinants of employment in urban local authority areas is described, with particular reference to the effects of non–strategic local authority fiscal behaviour. The data base for the study is a 1971 cross–section of 32 London boroughs. The estimated model is used to assess the contribution of changes in local authority taxing and spending decisions to changes in London employment 1966–71. The study finds evidence of considerable crowding–out effects, with an average of one quarter of the borough employment decline in the period being attributed to the local fiscal policies pursued, ceteris paribus