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Do Good Fences Make Good Neighbors? The Cross Border Impact of Casino Entrance

Authors

  • Michael J. Hicks


  • Michael J. Hicks is a director of the Center for Business and Economic Research and is an associate professor of economics, Ball State University, Muncie, IN 47304, USA.His e-mail address is: mhicks@bsu.edu. I wish to thank the participants of the 51st Annual Meeting of the Southern Regional Science Association in Charlotte, NC, and participants of the 103rd Annual Conference on Taxation in Chicago, and especially Michael Wenz and Jim Landers for organizing sessions at each event.
  • JEL Classification: R1, C1, O2

Abstract

This study estimates the impact of casino entrance in adjacent counties on aggregate and selected subsector incomes on counties adjacent in Indiana from 1990 to 2008. Employing a spatial econometric model and an approach that combines pre-casino entrance forecasts and actual income changes, this study finds very modest increases in income growth in casino counties in the econometric model but adjacent county income declines which are economically irrelevant. The forecast approach mirrors, with less precision, this finding. These findings suggest that welfare effects of casinos are more geographically distributed than the literature has yet reported primarily because of the redistribution of retail trade.

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