Consolidated city–county governments and economic stability

With economic development as a primary aim of city–county consolidations, a theoretical and empirical literature explores the effect of consolidation on economic conditions. However, despite the economic development effects arguably being most relevant during economic crisis, no studies have focused on consolidation’s effects during recession. Using county-level data from 13 states across the United States, we consider how consolidation influences economic stability during and after the Great Recession. After controlling for demographic, economic, and geographic factors, including potential spillover effects, the results suggest that consolidation does not promote stability for either employment, the unemployment rate, per capita income, or number of business establishments. These null effects are not influenced by government sector employment or driven by results from any particular state. The paper’s findings caution against local governments pursuing city–county consolidation in hopes of greater economic stability.