Abstract

The commercial gambling industry has grown rapidly since the end of the 20thcentury in large part due to the legalization and establishment of casinos. Commercial casinos comprise a majority of the billion-dollar industry despite only operating in just short of half of the United States. This paper analyzes the potential for commercial casinos to be a stimulant for local economic growth in the localities they operate in. As a new addition to the entertainment sector of a local economy, casinos will cause positive demand shifts to other industries that produce complementary or intermediate goods to casino gambling. However, negative demand shifts will occur to industries producing substitute goods. The theoretical analysis is extended to account for the aggregate demand, specifically the multiplier effect and migration of labor. Finally, the profit maximization of local firms is included and linked to the Solow growth model to model economic growth effects. Following the theory chapter is an extensive review of empirical literature. The hypothesis is also empirically tested through a regression analysis with panel data of 41 US counties from 2012 to 2019. The results of four different models, most notably the instrumental variable approach, support the hypothesis that the expansion of commercial casino gambling will be a significant positive factor in stimulating local economic growth.

Advisor

Luri, Moses

Department

Business Economics

Disciplines

Econometrics | Economics | Economic Theory | Growth and Development | Regional Economics

Keywords

Economic Growth, Casinos

Publication Date

2021

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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