The Costs and Benefits of Growth: Lawrence, Kansas, 1990-2003

Abstract

Since 1990 employment in the city of Lawrence, Kansas has grown by 34 percent, nearly three times as fast as the state as a whole. Such rapid growth both creates economic benefits for residents and increases the cost of city services. This paper shows that the main beneficiaries of rapid growth were homeowners, who realized capital gains because of the increasing real estate values. Local workers experienced little or no improvement in relative wage levels or reduced chances of unemployment because job growth resulted in substantial population migration. On the cost side, city expenditures nearly doubled in real terms since 1990. This rise in spending was financed primarily through increased sales tax revenues and higher charges for city services. Thus the burden of increased spending was distributed more widely than the benefits of rising property values. The extent to which the rise in city expenditures is directly attributable to increased population cannot be determined without further investigation into the changes in the quality of city services provided.