Using Eminent Domain for Economic Development: Does it Increase Private Sector Employment?*

Although controversial, local and state governments draw on broad interpretations of the Fifth Amendment takings clause to justify using eminent domain for economic development. Previous studies examine such uses from the perspective of property rights and the scope and size of government. This paper addresses the fundamental question: Do states that grant local governments liberal eminent domain powers actually enjoy greater economic growth? This paper estimates how liberal eminent domain laws affect private sector employment growth across states while controlling for national trend and industry mix effects. The results clearly show that allowing local governments to use eminent domain for economic development does not lead to more private sector jobs. **G. K. Turnbull, Department of Finance, University of Central Florida, 4000 Central Florida Blvd, PO Box 161400, Orlando, FL 32816-1400. Email: [email protected] *The authors thank session participants at the APEE 2012 conference and the Public Choice Society 2013 annual meetings for their comments.