Abstract
With the increasing number of cultural districts as place-based policies, one of the first questions that arise is: why do some states adopt cultural district laws but not others? Exploring the difference in timing of adoption by each state, I examine the determinants of cultural district laws. Following the policy diffusion literature, I test whether there is government, imitation, and learning mechanisms driving the adoption of cultural district laws in the USA. The results suggest the presence of government competition and imitation mechanisms. States compete with those geographically close to them, and once tax incentives is taken into account their production structure is also relevant. For cultural district laws, states imitate those with similar size.
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Notes
According to the National Assembly of State Arts Agencies, some states like Maine, Mississippi, Missouri, Ohio, Virginia and Wisconsin, have statutory language that grants local government power over cultural districts, with no role played by the state.
One interesting information, in particular in light of special interest groups, is the expenditure in lobbying from arts and cultural industry. However, the Followthemoney.org website has such data starting only in 2002, while the analysis in the paper starts in 2000. According to the website, only 12 states (AK, CA, CT, FL, MA, MI, MT, NE, NJ, NY, TX, and WI) received any lobby resources between 2002 and 2017 from at least one of these groups: “Actors, actresses & others in the live theater industry,” “Musicians,” and “Museums, art galleries, libraries, etc.” The average expenditure in lobbying from these three industries was $200,000 compared to an average of $552,475 of the other industries. From these 12 states, only three (CA, MA, and TX) have a cultural district law.
Appendix 1 shows yearly average LQ for states with and without a cultural district law. There is no statistically significant difference between the numbers in states with and without a cultural district law. Looking at sign in the differences, we see that over times states with no cultural district have larger LQ and in the case of establishments, after 2012 they are considered specialized in the arts industry while those with a cultural district law are not. At first this may seem counterintuitive, but it may be that even though there are policies targeting these industries, perhaps there are also added regulations that detracts business from these states. This, however, remains a question for future work and it is not in the scope of this paper.
Another method that can be used to evaluate policy diffusion is the so-called survival or hazard models. For the case of cultural district laws, some potential issues include the low number of states with a cultural district law and the existence of left and right censored observations. An interesting analysis would be to understand the determinants of cultural districts themselves using a survival model. However, there is a lack of information on timing of cultural district determination and this outside the scope of this paper.
To avoid any error in the calculation due to zeros, I added unity to the each difference.
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Acknowledgements
I am thankful for the helpful comments from participants of the 89th Southern Economic Association Annual Meetings, 55th Annual Meetings of the Public Choice Society, and seminar in the Free Market Institute at Texas Tech University.
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Ferreira Neto, A.B. The diffusion of cultural district laws across US States. Ann Reg Sci 67, 189–210 (2021). https://doi.org/10.1007/s00168-020-01045-8
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DOI: https://doi.org/10.1007/s00168-020-01045-8