Have Post-Kelo Restrictions on Eminent Domain Influenced State Economic Development?

Abstract

In 2005, the Supreme Court’s Kelo v. New London ruling reaffirmed governments’ right to use eminent domain for economic development purposes. Widespread public backlash over the ruling resulted in numerous states quickly passing laws restricting the use of eminent domain for such purposes. This study uses the swift and uneven response of state legislatures to the public outcry that followed Kelo to test the empirical question of whether restrictions on eminent domain affect states’ ability to fulfill their economic development goals. Results indicate that states that restricted the use of eminent domain following the Kelo ruling experienced no adverse effects in terms of state employment and gross state product or county employment and county income in the states’ most dense counties.