Do Restrictions on Eminent Domain Harm Economic Development?

After the U.S. Supreme Court upheld in the Kelo decision the use of eminent domain for private-to-private transfer of property for economic development, public outrage was followed by attempts to restrict such use of eminent domain. Opponents of restrictions predicted dire consequences for state and local economies. This study considers whether restricting the use of eminent domain for economic development results in negative economic effects. The authors examine economic indicators before and after legislative or judicial restrictions on eminent domain across all states and between states based on the type of legislative/judicial change. Results indicate that there appear to be no negative economic consequences resulting from limiting the use of eminent domain when examining economic indicators before and after legislative/judicial change. Adopting either moderate or major eminent domain restrictions appears to create no economic ill effects when analyzing differences in trends based on the type of legislation passed or scope of judicial decision.