The Economic Perspective: “Secondary Effects of Public Programs”

Mary:  I’m Mary Walden, with economist MW, welcoming you to the economic perspective.   Today’s program looks at secondary effects of public programs.  Mike, when a new public program is proposed, there are often studies released showing the program’s impacts.  But often the studies don’t agree on the size of these impacts.   Why is that?

 

Mike:  Summary Answer

  • Can be many reasons, but one major one is secondary impacts
  • Some studies include them; others don’t
  • Take a program to train workers for jobs
  • Primary impact is number of graduates of the program who found jobs, and their salaries
  • But also important might be two secondary impacts
  • First question is for those paying to fund the program, what would they have spent that money on, and how many jobs and incomes would that have created
  • Also, if – say- program is funded through a significantly higher tax rate on some taxpayers, will those taxpayers react by reducing their earnings and spending – thereby losing some jobs and incomes
  • Complete studies should include these secondary impacts
  • I’m MW

 

Mary:  And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics