a dynamic tiebout theory of voluntary vs involuntary provision of public goods this paper considers a dynamic model of tiebout like migration between communities that utilize distinct allocation procedures for public goods at issue is whether voluntary or compulsory procedures are more likely to prevail over time we model infinitely lived individuals who make repeated sequential location decisions over one of two communities each community uses a distinct mechanism for allocating public goods the first is one in which contributions are given voluntarily by the citizenry of the community the second is a compulsory scheme by which individuals are taxed proportionately to wealth with the tax determined by a majority vote opportunities to accumulate wealth exist via accumulation of public capital the markov perfect equilibria of the dynamic game are studied our main result shows that when accumulated wealth converges to a steady state individuals locational choices eventually select the involuntary provision mechanism this holds despite the fact that unanimous location in the voluntary provision community may in many cases remain as a nash equilibrium of the static game each period we also describe conditions under which voluntary provision survives these conditions require that accumulation of capital fails to decrease wealth dispersion over time the results are shown to be consistent with findings relating inequality to school choice

variable returns to agglomeration and the effect of road traffic congestion abstract this paper investigates the links between returns to urban density productivity and road traffic congestion a generalised translog production inverse input demand function is estimated to test for the existence of variable returns to agglomeration in manufacturing construction and service industries two separate measures of urban density in which proximity is represented by straight line distance or by generalised cost are constructed and included in the translog to identify the effect of road traffic congestion the results show that for some sectors of the economy diminishing returns to urban density can set in causing the magnitude of agglomeration elasticity to fall as effective densities increase the generalised cost based measure of agglomeration produces higher elasticities because it captures both time and distance dimensions of density a comparison of spatial variance in estimates indicates that road traffic congestion plays an important role in explaining diminishing returns for the most highly urbanised locations

the effect of public capital in state level production functions reconsidered using a panel data set for the forty eight contiguous states from 1970 to 1983 several estimates are provided of a cobb douglas production function with three types of public capital as inputs various specification tests are systematically applied to test for both random and fixed state effects nonstationarity endogeneity of the private inputs and measurement error in the preferred specification which is first differences with fixed state effects the public capital variables are not significant while the fixed state effects and private input variables are significant copyright 1996 by mit press

the economic theory of clubs some clarifications abstract we provide a classification of club models and relate differences in implications to differences in assumptions then we address two main controversies one concerning the optimality of market provisions of public goods and their optimality and the other concerning the desirability of segregation

compact cities and economic productivity in mexico this paper examines the contingent nature of agglomeration economies existing empirical evidence that compact cities are more productive is mostly from countries and regions with highly productive

tiebout with politics capital tax competition and constitutional choices this paper examines how capital tax competition affects jurisdiction formation we describe a non cooperative locational model of public goods provision choices where the levels of taxation and the local public good varieties provided within jurisdictions are selected by majority voting and where equilibrium jurisdictions consist of consumers with similar tastes we show that interjurisdictional tax competition results in an enlargement of jurisdictional boundaries and even in the absence of intrajurisdictional transfers can raise welfare for all members of a jurisdiction

competition over high income workers job growth and access to labour in atlanta access to a large labour pool labour pooling leads to local economic concentrations through agglomeration economies however these concentrations may be self limiting by reducing labour availability through competition over high skill workers this paper examines whether labour pooling and labour availability of workers with different incomes account for local job growth in the atlanta metropolitan area between 2000 and 2006 workers income is employed to account for the human capital of workers including education and skills it is found that the availability of high income workers is the only positive significant factor for job growth and the spatial size of the effect is larger than the traffic analysis zone neighbourhood scale in contrast no labour pooling indicators show a positive association with job growth the finding casts doubt on labour pooling effects at the intraregional level and suggests avenues for further research on local area agglomeration economies

us metropolitan spatial structure and labour accessibility metropolitan areas vary widely in employment distribution and labour accessibility comparing four us metropolitan areas atlanta boston phoenix and washington dc it is found that atlanta and washington dc suffer from low labour accessibility compared with boston and phoenix moreover large suburban employment centres in atlanta and washington dc suffer from even lower accessibility than other employment centres within the same metropolitan areas or their counterparts in boston and phoenix their low labour accessibility is mainly explained by slower commuting speeds even though their residential and employment densities are modest congestion in these employment centres is severe enough to undermine accessibility the results raise questions about the effectiveness of creating large sub centres in metropolitan areas particularly creating auto oriented edge city style employment centres at highway nodes

role of oil price shocks on macroeconomic activities an svar approach to the malaysian economy and monetary responses abstract this study examines the impact of oil price uncertainty on malaysian macroeconomic activities and monetary responses we use a structural var svar model based on monthly data over the period 1986 2009 the egarch model estimates show an important asymmetric effect of oil price shocks on the conditional oil price volatility dynamic impulse response functions obtained from the svar model show a prolonged dampening effect of oil price volatility shock on malaysian industrial production we also find that levels of consumer price index cpi decline with a positive shock to oil price uncertainty this is the result of negative demand shock due to the postponement of consumption of big ticket items by individuals households and other sectors of the economy we also found that the malaysian central bank adopts an expansionary monetary policy in response to oil price uncertainty variance decomposition analysis reconfirms that volatility in the oil price is the second most important factor to explain the variance of industrial production after its own shocks these results shed some light on how the central bank of malaysia can use controlling mechanisms to stabilize aggregate output and price level

efficient urbanisation economic performance and the shape of the metropolis the influences of urban form and transport infrastructure on economic performance show up in several contemporary policy debates notably sprawl versus compact city and in the developing world the future of mega cities this paper probes these relationships using two scales of analysis at the macro scale an econometric analysis using data across 47 us metropolitan areas reveals that employment densities and urban primacy are positively associated with worker productivity suggesting the presence of agglomeration economies congested freeways are shown to be a consequence of strong economic performance an intrametropolitan analysis using data on sub districts of the san francisco bay area generally reinforces the findings of the macro scale analysis in the bay area labour productivity appears to increase with size of labour marketshed and high accessibility between residences and firms higher employment density and well functioning infrastructure also contribute positively to economic performance

anonymity efficiency wages and technological progress although the industrial revolution is often characterized as the culmination of a process of commercialisation the precise nature of such a link remains unclear this paper provides an analysis of one such link the role of commercialisation in raising wages as impersonal labour market transactions replace personalized customary relations in the presence of an aggregate capital externality we show that the resulting shift in relative factor prices will under certain conditions lead to higher capital intensity in the production technology and hence a faster rate of technological progress we provide historical evidence using european data to show that england was among the most urbanized and the highest wage countries at the onset of the industrial revolution the model highlights the effects of changes in the availability of information typical of a modernising country on efficiency wages and technological progress

political institutions and sorting in a tiebout model we construct a computational model of tiebout competition and show that political institutions differ in their ability to sort citizens effectively in particular we find that certain types of institutions those that become more politically unstable as citizen heterogeneity increases perform relatively poorly given a single jurisdiction yet these same institutions perform relatively well when there are multiple jurisdictions we provide an explanation for this phenomenon which draws upon simulated annealing a discrete nonlinear search algorithm jel

size sprawl speed and the efficiency of cities the efficiency of cities defined here as labour productivity adjusted for differences in industry mix is hypothesised to be a function of the effective size of the labour market of cities defined as the average number of jobs available in less than t minutes to workers in the city this hypothesis is verified on a sample of 23 french cities this effective size of the labour market is further explained by three factors the size of the city the average potential job home distance sprawl and the average speed at which journey to work takes place the same sample of 23 cities is used to determine the elasticities of the effective size of the labour market with respect to each of these three factors

interjurisdictional sorting and majority rule an empirical analysis the goal of this paper is to provide a comprehensive empirical analysis of majority rule and tiebout sorting within a system of local jurisdictions the idea behind the estimation procedure is to investigate whether observed levels of public expenditures satisfy necessary conditions implied by majority rule in a general equilibrium model of residential choice the estimator controls for observed and unobserved heterogeneity among households observed and unobserved characteristics of communities and the potential endogeneity of prices and expenditures as well as the self selection of households into communities of their choice we estimate the structural parameters of the model using data from the boston metropolitan area the empirical findings reject myopic voting models more sophisticated voting models based on utility taking provide a potential explanation of the main empirical regularities

opinions as incentives we study costs and benefits of differences of opinion between an adviser and a decision maker even when they share the same underlying preferences over decisions a difference of opinion about payoff relevant information leads to strategic information acquisition and transmission a decision maker faces a fundamental trade off a greater difference of opinion increases an adviser s incentives to acquire information but exacerbates the strategic disclosure of any information that is acquired nevertheless when choosing from a rich pool of opinion types it is optimal for a decision maker to select an adviser with some difference of opinion centralization of authority is essential to harness these incentive gains since delegation to the adviser can discourage effort

migration with endogenous moving costs we study a dynamic model of labor migration in which moving costs decrease with the number of migrants already settled in the destination this assumption is supported by sociological studies of migrant networks with endogenous moving costs migration occurs gradually over time once it starts it develops momentum and migratory flows may increase even as wage differentials narrow in addition migration tends to follow geographical channels and low moving cost individuals migrate first these patterns are consistent with historical evidence from the great black migration of 1915 1960 in the united states much of which cannot be reconciled with existing migration models excerpt

getting closer or drifting apart advances in communication and transportation technologies have the potential to bring people closer together and create a global village however they also allow heterogenous agents to segregate along special interests which gives rise to communities fragmented by type rather than geography we show that lower communication costs should always decrease separation between individual agents even as group based separation increases each measure of separation is pertinent for distinct types of social interaction a group based measure captures the diversity of group preferences that can have an impact on the provision of public goods an individual measure correlates with the speed of information transmission through the social network that afiects for example learning about job opportunities and new technologies we test the model by looking at coauthoring between academic economists before and during the rise of the internet in the 1990s

a test for allocative efficiency in the local public sector abstract this paper develops a test for pareto efficiency in the local public sectorusing the analytical result that aggregate property value is maximized at the public output level which satisfies the samuelson condition for efficiency by using cross section data it is possible to deduce whether a representative community provides its public goods in a property value maximizing and hence efficient fashion the empirical results show no systematic tendency to either under or over provide public goods in a sample of massachusetts communities

productivity and city size a critique of the evidence a critique of two leading articles in the productivity and city size literature results in revised estimates of the productivity advantages of large cities in particular extant estimates of the elasticity of productivity with city size are revised downward by over 100 percent for the manufacturing sector and about 25 percent for the entire urban economy after revision productivity advantages of larger cities are found to be much larger for the nonmanufacturing sector than for the manufacturing sector hence revitalization policies for large cities should be focused on nonmanufacturing sectors

the factory system in the british industrial revolution a complementarity thesis abstract this paper offers an explanation for the rise of the factory system in britain during the industrial revolution 1770 1850 based on the concept of complementarity investment in machinery process supervision and improved quality control formed a cluster of complementary activities in which adopting any one increased the marginal return to also adopting the others further factory owners introduced process supervision not only to increase work effort but also to balance worker incentives among production quality control and asset maintenance tasks to test this hypothesis i have constructed a new data set from firm studies and archival records measures of firms adoption of the activities are positively correlated in the cross section of firms providing evidence in favor of the complementarity hypothesis

the attenuation of human capital spillovers abstract this paper uses 2000 census data to estimate the relationship of agglomeration and proximity to human capital to wages the paper takes a geographic approach and focuses on the attenuation of agglomeration and human capital effects differencing and instrumental variable methods are employed to address endogeneity in the wage agglomeration relationship and also to deal with measurement error in our agglomeration and human capital variables three key results are obtained first the spatial concentration of employment within five miles is positively related to wage second the benefits of spatial concentration are driven by proximity to college educated workers an instance of human capital spillovers third these effects attenuate sharply with distance

urban governance competition and welfare the market mechanism of spatial resource allocation is examined in a system of cities where social welfare depends on city size the competitive dynamics of the system is a product of the interplay between people s individual exit type choices migration and their collective voice type choices urban governance it is shown that the use of efficiency enhancing measures of urban governance depends on the pressure of exit a necessary condition for dynamic efficiency is that the market equilibrium of migration is non stable which sounds somewhat paradoxical dynamic efficiency is more likely to emerge between initially small cities in which agglomeration economies dominate than between initially large cities in which agglomeration diseconomies dominate the incentives for proper urban governance are somewhat ambiguous in the most relevant case where cities are of asymmetrical size it is therefore important to strengthen the incentives by means of national urban policy

optimisation of city size club theoretical analysis of migration between asymmetrical cities shows that centralised policy intervention is necessary to ensure the efficient allocation of people between cities administrative and economic measures are compared as policy instruments of central government these instruments are found to differ in their effects on residential allocation and welfare in particular a lump sum tax transfer programme pools the welfare creating potentials of cities thus affecting the efficiency condition therefore lump sum tax transfers are superior to both quantity rationing and pigouvian taxes and they also activate rather than stabilise migration

choosing peers homophily and polarization in groups this paper studies the formation of peer groups entailing the joint production of public goods in our model agents choose their peers and have to pay a connection cost for each member added to the group after groups are formed each agent selects a public project to make a costly contribution to and all members of the group experience the benefits of these contributions since agents differ in how much they value one project relative to the other the group s preferences affect the generated profile of public goods we characterize mutually optimal groups groups that are optimal for all their members when contribution costs are low relative to connection costs mutually optimal groups must be sufficiently homogeneous as contribution costs increase relative to connection costs agents desire more connections which in turn raises the risk of free riding extreme peers are then more appealing since they are more willing to contribute and polarization arises

coercive contract enforcement law and the labor market in 19th century industrial britain british master and servant law made employee contract breach a criminal offense until 1875 we develop a contracting model generating equilibrium contract breach and prosecutions then exploit exogenous changes in output prices to examine the effects of labor demand shocks on prosecutions positive shocks in the textile iron and coal industries increased prosecutions following the abolition of criminal sanctions wages differentially rose in counties that had experienced more prosecutions and wages responded more to labor demand shocks coercive contract enforcement was applied in industrial britain restricted mobility allowed workers to commit to risk sharing contracts with lower but less volatile wages

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

escape from the market negotiating work in lancashire list of figures list of tables preface glossary list of abbreviations 1 introduction the myth of the lancashire labour market part i labour market failure 2 custom against the market the early labour market 3 principals and agents the labour market into the second generation 4 who s minding the mill the supervision problem part ii the economics of piece rate bargaining 5 the fair wage model part iii how did labour markets really work 6 fair and unfair wages 1825 50 7 short hours and seniority in the hungry forties 8 rules and standards wage lists in lancashire part iv conclusion 9 more lessons from the cotton mills notes bibliography index

assessing the importance of tiebout sorting local heterogeneity from 1850 to 1990 this paper argues that long run trends in geographic segregation are inconsistent with models where residential choice depends solely on local public goods the tiebout hypothesis we develop an extension of the tiebout model that predicts as mobility costs fall the heterogeneity across communities of individual public good preferences and of public good provision must weakly increase given the secular decline in mobility costs these predictions can be evaluated using historical data we find decreasing heterogeneity in policies and proxies for preferences across i a sample of u s municipalities 1870 1990 ii all boston area municipalities 1870 1990 and iii all u s counties 1850 1990

a critique of tiebout s theory of local public expenditures the last section of this paper presents a rigorous version of tiebout s theory of local public goods it is shown that equilibria exist and are pareto optimal this rigorous theory follows closely the more rigorous part of tiebout s work this rigorous theory makes a number of very special assumptions which make local public goods essentially private the body of this paper presents a series of examples which show that if one tries to generalize the rigorous version of tiebout s theory in a number of interesting directions then equilibria may no longer exist or may not be pareto optimal the conclusion is that tiebout s idea does not lead to a satisfactory general theory of local public goods the goal of this paper is to point out that tiebout s notion of equilibrium with local governments does not have the nice properties of general competitive equilibrium except under very restrictive assumptions tiebout 39 suggested that there are competitive forces which tend to make local governments allocate resources in a pareto optimal fashion consumers choose to live in those towns with the mix of taxes and public goods they prefer local governments choose this mix so as to attract inhabitants this idea may seem intriguing for it suggests that the invisible hand solves an important part of samuelson s perplexing public goods problem 32 tiebout in fact makes an argument which is nearly rigorous i give a rigorous version of his argument at the end of the paper however in this rigorous version so many restrictive assumptions are made that public goods become essentially private in the body of the paper i give a series of examples with which i try to convince the reader that one is forced to adopt tiebout s restrictive assumptions the idea is that if one changes any of his assumptions then either equilibria may not exist or may not be pareto optimal my examples are presented in the context of a general class of tiebout models i consider several subclasses one of which is the special case considered by tiebout in each of the subclasses except that considered by tiebout i give a counterexample either to the existence of equilibrium or to its pareto optimality the subclasses are so chosen that the difficulties they reveal would be shared by any reasonable tiebout model which differed from his special case i believe that my examples controvert tiebout s suggestion 39 last paragraph that his theory compares favorably with competitive equilibrium theory most of the examples in this paper have already appeared in the literature i cite related work as i go along what is new here is that i assemble the examples in a unified argument

location search costs and youth unemployment experimental evidence from transport subsidies do high search costs affect the labour market outcomes of jobseekers living far away from jobs i randomly assign transport subsidies to unemployed youth in urban ethiopia treated respondents increase job search intensity and are more likely to find good permanent jobs subsidies also induce a short term reduction in temporary work i use a high frequency phone call survey to track the trajectory of search behaviour over time to show that the subsidies significantly increased job search intensity and the use of formal search methods the evidence suggests that cash constraints cause young people to give up looking for good jobs too early

clubs and the market this paper defines a general equilibrium model with exchange and club formation agents trade multiple private goods widely in the market can belong to several clubs and care about the characteristics of the other members of their clubs the space of agents is a continuum but clubs are finite it is shown that i competitive equilibria exist and ii the core coincides with the set of equilibrium states the central subtlety is in modeling club memberships and expressing the notion that membership choices are consistent across the population

imperfect mobility and local government behaviour in an overlapping generations model abstract this paper reconsiders the implications of land value maximizing local governments in an overlapping generations model with imperfect mobility specifically residents develop an attachment to place or location specific capital once they reside in a town for a single time period the analysis shows that attempts by governments to capture the resulting rents from less mobile individuals create inefficient migration leave all workers worse off in an ex ante sense and place relatively high burdens on those workers who have high migration costs public good levels are also inefficiently chosen

heterogeneity stratification and growth macroeconomic implications of community structure and school finance this paper examines how socioeconomic stratification and alternative systems of education finance affect inequality and growth agents interact through local public goods or externalities school funding neighborhood effects and economywide linkages complementary skills knowledge spillovers sorting families into homogeneous communities often minimizes the costs of existing heterogeneity but mixing reduces heterogeneity faster integration therefore tends to slow down growth in the short run yet raise it in the long run a move to state funding of education presents society with a similar intertemporal trade off local and global complementarities play major roles in determining the efficient social and educational structures copyright 1996 by american economic association

urban diversity and economic growth at the risk of some simplification it is possible to identify four periods of intense study of cities by economists each of these has led to an increased understanding of the economics of urban areas and the unique role played by cities in the modem economy the first of these periods occurred in the decade after world war i only about ten years after the truck revolutionized the transport of goods within urban areas this period included the first systematic empirical analysis of the forces affecting the location of firms and households within cities robert murray haig 1926 and a number of other microeconomists at columbia analyzed the spatial pattems of manufacturing activity in lower manhattan and in the rest of new york city haig jmd his colleagues devoted considerable attention to where things belong in an urban area p 402 providing the first systematic economic analysis of urban spatial structure for example they analyzed the garment industry concluding that it was destined by nature to disperse north of 14th street and predicting that it would follow the estabhshed spatial pattem of the cooperage barrelmaking industry standardization in size and quality of barrels had meant that identical barrels could be made throughout the new york metropolitan area even in new jersey and the introduction of the truck meant that they could be transported cheaply throughout the region and exported the second of these periods though not in chronological order began in the mid 1960s it formalized many of the insights about location incentives within urban areas which had been uncovered a half century before mixed them with the logic of heinrich von thunen s 1826 ancient theories about agricultural crops and land values and applied them to the hotisehold sector the works of william alonso 1964

migration between home country and diaspora an economic analysis this paper investigates the distribution of a population group between a home country and diaspora given sequential decision making regarding migration at the individual level the home country is attractive to the members of the group yet their presence there requires a fixed amount of public spending e g on defense the per capita tax burden depends then on the size of the domestic population reflecting a case of fiscal externality this results in an inefficient distribution of the group between the home country and the diaspora encouraging immigration to the home country is an interest not only of those individuals who are currently in the home country but also of those residing in the diaspora however only when the burden of public spending in the home country is large enough do the latter volunteer to bear part of it even then in general this part is smaller than socially optimal

manufacturing productivity and city size in canada 1975 and 1985 does population matter this paper analyses the relationship between manufacturing productivity and city size based on canadian data for 1975 and 1985 the results differ in some respects from those of us studies in particular in canada city size appears to have a weaker impact on manufacturing productivity and an impact which is diminishing over time these findings may be a consequence of several differences in the characteristics of canadian and us firms as well as differences between the two urban systems urbanisation economies in canada may also have been weakened by regional development policies there are at the same time some striking similarities in the industries which show positive urbanisation economies in the us and canada there is also a tendency in canada for both industries with smaller firms and industries with higher rates of domestic ownership to exhibit greater urbanisation economies