Eminent Domain Takings and Economic Development: The Effect of State Restrictions on Metropolitan Area Economic Development.

This article examines the economic impact of state-level restrictions on the use of eminent domain for economic development, focusing specifically on metropolitan statistical areas (MSAs) where property assembly challenges are most pronounced. Following the 2005 Supreme Court decision in *Kelo v. City of New London*, which upheld local governments' right to use eminent domain to promote economic development, 21 states enacted laws effectively banning such use. Using difference-in-differences methods that control for staggered adoption and covariates, the study finds that MSAs in states with these restrictions experience statistically significant declines in employment (about 1.8%) and earnings (about 3.4%) compared to unrestricted areas. These findings suggest that limiting eminent domain for economic development may hinder local economic growth in dense urban areas, supporting arguments by local governments and development agencies that eminent domain is a necessary tool to overcome holdout problems in land assembly.