What Should Michigan Be Doing
to Promote Long-Run Economic Development?

Upjohn Institute Working Paper 09-160

Timothy J. Bartik, Senior Economist
W.E. Upjohn Institute for Employment Research
e-mail: bartik@upjohn.org

November 2009

JEL Classification Codes: R58, R23, J48; J24, I28

Key words: State and local economic development policy; local labor market policy; Michigan

This paper argues that Michigan can take cost-effective actions to significantly improve the primary state economic development goal: higher per capita income of Michiganís residents. Higher per capita income of Michiganís residents can be achieved through state policy actions that use cost-effective means to either lower the marginal costs of businesses that expand in the state, or boost the skills of state residents.

In this paper, I offer eight ideas for how to lower marginal business costs and boost skills. Four of these ideas focus on lowering marginal business costs. Four other ideas focus on boosting skills. For each of these eight policy proposals, I suggest a plausible scale and cost for the proposal. I also provide an estimate of the benefits of the proposal. These benefits are measured as the increase in the present value of per capita labor earnings of Michigan residents.

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