The Demand for the Services of Non-Federal Governments

Abstract

The empirical literature relating crosssectional variations of per capita public spending to various economic, political and demographic factors is both lengthy and varied.' Differences in expenditures over political units are explained by differences in per capita incomes, urbanization, area, population density, taxable capacity, tax rates, absolute population size, grantsin-aid from higher levels of government, and school-aged population rates. With few exceptions,2 the models employed in these studies are ad hoc constructions with little basis in the theory of choice.3 Our aims are to posit a model of public spending derived from the received theory of collective decision making4 and to test the significance of certain variables assumed by this simple theory to be important determinants of the levels of state and local government expenditures.