Rapidly expanding urban populations have pushed out cities' geographic reach in recent years, leading to rising population densities in previously rural areas. The influx of new residents into these areas have caught many localities unprepared to provide commensurate local infrastructure promptly, leading to congestion. Localities’ ability to provide infrastructure is made difficult by infrastructure production often involving large fixed costs as well as legal or political restrictions on their ability to generate revenues through impact fees. As a result, a variety of local policies have emerged to address increases in population, but debate continues over the effects of these policies. An examination of the primary policies employed by Loudoun County, Virginia, suggests their impact on the welfare of the county's residents.
Amanda L. Kramer
Order single copies or subscribe to Economic Quarterly and other publications from the Federal Reserve System.