the role of ignorance in the emergence of redistribution abstract our study investigates the emergence of redistribution societies when individuals vote on distribution rules with their feet the choice of a distribution rule is a strategic decision since individuals differ in the productivity of their investments and hence total income depends on the types of individuals who have chosen the same distribution rule in our laboratory experiment we find that compared to full information the amount of redistribution increases if individuals face uncertainty about their productivity at the time they choose a distribution rule moreover we find a coexistence of libertarian and redistributive societies as well as imperfect segregation for all degrees of uncertainty so that heterogeneous redistribution societies turn out to be sustainable throughout

a note on the tiebout tullock hypothesis the period 1975 1980 numerous earlier studies have for the most part found empirical support for the tiebout tullock hypothesis for the periods of the 1950s and 1960s the present study draws on more recent data including the 1980 census of the population to find additional new support for the tiebout tullock hypothesis apparently there is strong evidence to indicate that for the period 1975 1980 geographic differentials in state and local government tax and expenditure policies significantly influenced geographic mobility migration these findings should be of special importance and interest to policymakers in view of the fact that internal migration is the single most important determinant of population and labor force redistribution in the united states

interprovincial migration and local public goods the objective of this paper is to test whether fiscally induced migration occurs in canada that is whether interprovincial migration flows are influenced by government tax and expenditure policies in order to do so a multinominal logit model of migration is developed in which individuals choose to live in the province where their utility would be highest the model is estimated using aggregate data for the period 1962 81 the results indicate that migration is influenced by provincial government spending trough the magnitude and direction of the effect differs with the type of government spending the implication of these results is that intergovernmental transfer payments and provincial natural resource revenues also have the potential to influence migration flows in canada summary in fre excerpt

us regionalism and rationality regionalism continues to be proffered as a policy prescription for us metropolitan ills while many urban scholars discuss the benefits of regional approaches to problem solving others question and sometimes dismiss the possibility of widespread comprehensive regionalism this latter group generally takes one of two perspectives first they argue that local autonomy and fragmentation prohibit regional collaboration secondly rational choice theorists claim jurisdiction centred economic interest spurs intraregional competition and impedes cooperation although both perspectives can be criticised as overdeterministic they appear to be supported by the limited number of examples of comprehensive metropolitan co operation in the us this article identifies a theoretical connection and empirical similarity between these views of impediments to regionalism the author argues that strategies suggested by rational based collective action theory apply to either the autonomy or competition argument however

revolution evolution and local government structure an empirical analysis of london conventional analyses of local government structure focus on the revolutionary changes that result from deliberate reorganisations we propose a new perspective on structural change that emphasises the importance of evolutionary processes as well as radical reforms evolutionary changes in structure are caused for example by population growth or decline and reallocations of service responsibilities between tiers the argument is illustrated by an empirical analysis of fragmentation and concentration in the structure of local government in london the evidence reveals that structural change is the norm rather than the exception it occurs even when the absolute number of local government tiers and units is constant

credit frictions and the cleansing effect of recessions recessions are conventionally considered as times when the least productive firms are driven out of the market how do credit frictions affect this cleansing effect of recessions we build and calibrate a model of firm dynamics with credit frictions and endogenous entry and exit to investigate this question we find that there is a cleansing effect of recessions in the presence of credit frictions despite their effect on the selection of exiting and entering firms this result holds true regardless of the nature of the recession average firm level productivity rises following a negative aggregate productivity shock as well as following a negative financial shock

the implications of competition among jurisdictions does tiebout need politics the paper investigates whether compensation among local jurisdiction is by itself sufficient to ensure efficient provision of local public goods jurisdictions have fixed boundaries and each has an entrenched government with the power to tax and supply the public good residents can move costlessly among jurisdictions it is shown that competition among numerous jurisdictions is not sificient to guarantee public sector efficiency though residents can vote with their feet land is immobile hence governments can unsurp some land rents for their own ends increasing the number of jurisdictions limits but cannot completely eliminate the ability to exercise discretionary governmental power

the expenditure effects of restricting competition in local public service industries the case of special districts the purpose of this paper has been to extend the type of positive economic analysis of the urban public economy that has been initiated by wagner and martin 1978 wagner and weber 1975 ostrom et al 1976 and others the hypothesis was tested that restricting the growth of single purpose special districts renders local service industries more monopolistic and should therefore increase local public expenditure levels evidence brought forth indicates that the effect of such restrictions imposed in two states california and oregon was to increase general per capita expenditures ceteris paribus per capita expenditures on water supply and fire protection two services frequently provided by special districts were also seen to increase dramatically after controlling for other supply and demand determinants of local public expenditures thus the empirical test of the last section supports the monopoly enhancing view of special district growth restrictions and leads us to reject the alternative reformist hypothesis that consolidating or annexing special districts will lead to improved hierarchical organization of local government and diminish the cost of providing local public services

local intergovernmental competition and the law of 1 n this article proposes an empirical framework based on a synthesis of the seminal law of 1 n and leviathan theories which models the relationship between government spending and the number of jurisdictions in a federal system as determined by the interplay of the costs related to centralized government which fall as the number of jurisdictions increases and the costs of distributive politics which rise as the number of jurisdictions increases using a panel of u s state and local government spending data empirical tests based on this combined framework show that the effect of intergovernmental competition predicted by the leviathan model is partially offset by the law of 1 n this result helps explain the inconsistent findings in the previous empirical literature

an alternate test of the tiebout hypothesis this paper has presented an indirect test of the tiebout hypothesis that does not require explicit consideration of the interaction between the markets for housing and local public services the results suggest that at least in the case of elementary and secondary education when allowed to choose from a selection of jurisdictions individuals locate so as to minimize the allocative inefficiency that results from collective provision of local services

jurisdictional homogeneity and the tiebout hypothesis abstract in this paper an alternative to the capitalization approach to testing the tiebout model is presented the tiebout foot voting mechanism suggests that households will sort and stratify into approximately homogeneous local public goods jurisdictions at a point in time the efficiency of the sort will be positively related to the number of existing jurisdictions using a measure of homogeneity introduced by theil the relationship between stratification homogeneity within jurisdiction and number of jurisdictions is tested for a sample of school districts within 33 smsas the tiebout stratification hypothesis is confirmed

migration and income redistribution responsibilities this study examines whether afdc benefits determine or discourage state to state migration flows in the united states a pooled cross section time series model is developed to estimate afdc benefits in a state and recipients and whether benefits in one state affect benefits in other states a second model using data from the 1980 census and the panel study of income dynamics estimates migration of afdc recipients and the level of benefits in in migration and out migration states both models indicate that small but statistically significant amounts of migration occur which may be quite important but only in the long run movers although small in number are much more likely to move to a state with higher benefits states perceive this migration as important indicating that states should have less control and the federal government more control over income redistribution

the effect of welfare and wage levels on the location decisions of female headed households abstract this paper develops and estimates a model designed to calculate the impact of welfare benefit levels wages and tax rates on the location choices of female headed households the empirical model assumes that women simultaneously choose both where they will live and whether or not they will participate in the welfare system based on their expected income and expected hours of work for each location participation possibility these income and hours expectations depend in turn on the welfare benefits wage and tax rates facing each household in each location it is found that both regional welfare levels and wage rates have a significant effect on the location decisions of this population the probability of a typical female headed household with little outside income leaving an area with low welfare payments and low wages can be as much as 12 points higher over a 4 year period than the probability of leaving a high welfare high wage area

systematic assessment error and intrajurisdiction property tax capitalization over the past twelve years considerable evidence has accumulated on the extent to which intercommunity differences in property tax burdens are capitalized into property values 17 21 8 7 25 recently linneman 14 has analyzed the validity of this evidence after taking into consideration alternative models of local government finance in the model that he believes best represents the spirit of the tax capitalization literature local government expenditures are financed wholly by property tax receipts he demonstrates that in this case a perfect correlation between taxes and public goods makes it econometrically impossible to estimate property value equations unless measurement errors and omitted variables are present he therefore asserts that existing results on the tax capitalization issue are of nebulous value

exiting behavior under tiebout conditions towards a predictive model the paper briefly reviews recent research that adapts and extends the tiebout model of residential choice paying special attention to those studies which utilize hirschman s exit voice and loyalty model the paper argues that these are theoretically and empirically flawed since they do not take account of tiebout rational intra jurisdictional moves but concentrate upon potential exiting behavior the article then tests the importance of the inter intra jurisdictional distinction using a logit model of factors using data from the 1990 economic and social research council mobility study ecsrcms of london finding weak results from this analysis the article then offers a more powerful test of factors predicting a move to jurisdictions with preferable tax rates

decentralization and access to social services in colombia decentralization is meant to improve access to public services but relatively few studies examine this question empirically we explore the effects of decentralization on access to health and education in colombia using an original database covering over 95 of colombian municipalities we show that decentralization improved enrollment rates in public schools and access of the poor to public health services in both sectors improving access was driven by the financial contributions of local governments small increases in own shares of spending led to surprisingly large increases in the access of the poor in both sectors our theoretical model implies that where local information dominates productive efficiency elected local governments will provide services better tailored to local needs decentralizing such services should increase their use by the public together theory and empirics imply that decentralization made the colombian state more accountable it provided local officials with the information and incentives they need to allocate resources in a manner responsive to voters needs and improve the impact of public expenditures

the effect of the social welfare system on metropolitan migration in the us by income group gender and family structure this research paper addresses some important issues regarding out migration from and in migration to metropolitan areas in the u s particularly the effect of the social welfare system on migration decisions the primary focus is on migration by income group poor versus non poor with a secondary focus on how gender and family status relate to migration the results provide only very weak support for the hypothesis that social welfare benefits influence out migration decisions only of non poor female headed households but moderate support for the effect of such benefits on in migration decisions especially of low income and female headed households excerpt

searching for leviathan comment and extension in a recent article wallace oates 1985 investigated whether fiscal decentralization tended to act as a constraining influence on the overall size of the public sector this hypothesis has been advanced by several alternative theories of government behavior including richard musgrave s 1959 model of how the distribution function of government would be carried out by subnational governments geoffrey brennan and james buchanan s 1980 leviathan model and the more traditional public choice model for example walter hettich and stanley winer 1984 all contend that the decentralization of tax and spending decisions introduces competition among governmental units seeking to attract citizens and other mobile resources and thereby constrains taxing power oates analyzed two data sets one pertaining to the state and local sector in the united states and the other consisting of a sample of 43 countries and found little empirical support for the decentralization hypothesis the purpose of this paper is to reconsider his analysis in the case of state and local governments specifically it will be argued that oates s measures of decentralization may be inappropriate to test the hypothesis furthermore by taking into account the structure or composition of local governmental jurisdictions within a state empirical support of the decentralization hypothesis can be marshaled for general purpose local governments such as counties and municipalities i measuring fiscal decentralization among the states

fragmentation and the growth of local government an assumption of the post world war ii metropolitan reform movement was that fragmentation of metropolitan regions into multiple local governments was wasteful and inefficient increasing the cost and size of government more recently polycentrists have argued that the competition between multiple governments in metropolitan regions can in factreduce the growth in government by providing a competitive check on the excessive demands of local bureaucrats for more resources in this article i explore the effects of fragmentation on growth in the size of suburban municipal government budgets and in the number of services offered competition inherent in more fragmented metropolitan regions is shown to slow the expansion in local government expenditures and service levels

economic competition and political competition an empirical note this paper has examined the proposition that more concentrated or consolidated metropolitan areas will produce public goods less efficiently than if there were a greater degree of interjurisdictional competition the empirical evidence garnered in section 3 suggests that interjurisdictional competition does tend to reduce the cost of providing local public services and consequently local government expenditure levels

the influence of taxes on migration evidence from switzerland empirical studies on the impact of taxation on migration have been limited by a lack of comparable data in an international context and a lack of variation in tax burdens within countries a notable exception to the latter is switzerland prior empirical studies on tax competition in switzerland have had to rely on aggregated data in general these studies have been supportive of the notion of tax competition i e high earners tend to relocate to low tax regions the authors use an alternative panel approach based on micro data from the first three waves of the newly established swiss household panel despite active community tax policies aimed at attracting new residents and a significant increase in tax burden dispersion among communities in the past decade no tax induced migration is observed migration decisions are found to be strongly influenced by accommodation related factors that point to important housing market effects

an empirical analysis of state and local tax structure in the context of the leviathan model of government this paper has investigated the ability of an extreme and relatively simple model of political behavior to explain the level of revenues generated by state and local governments in general the behavior of these governments appears to be at least consistent with many of the fiscal outcomes predicted by the leviathan theory several although not all of the specific leviathan theory hypotheses considered received empirical support the evidence was consistent with the hypothesis that states utilizing comprehensive tax bases especially a personal income tax can be expected to generate higher levels of aggregate revenues strong support was also observed for the contention that intergovernmental competition by general purpose substate governments may serve as a substitute for constitutional constraints in limiting the revenue generating power of local governments

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

local authority fiscal stance and the pattern of residential migration in the north west of england the degree of fiscal mobility present in household migration flows between local authority areas in northwestern england is assessed following an introduction the paper is divided into three sections the first reviews the methodologies of previous attempts to assess the extent of fiscally induced migration noting the dominance of american studies and outlines a choice theoretic structure within which it is possible to model human migration patterns section iii considers the problems inherent in modelling migration flows and section iv presents results for a compound poisson analysis of migration between local authority areas within the four counties of the north west region of england as well as an assessment of the prevalence of fiscal mobility excerpt

size structure and administrative overheads an empirical analysis of english local authorities the relationship is analysed between size local government structure and administrative overheads in english local authorities size and structure effects are tested while controlling for a range of other variables including the relative prosperity of the local population and the diversity of their service needs the empirical results show that population size consistently has a linear negative effect central administrative costs are lower in larger local authorities the results also show that controlling for size administrative overheads are higher for councils in the lower tier of the existing two tier system the analysis provides support for arguments that economies of scale might be achieved by amalgamating smaller councils into larger units and by combining counties and districts into unitary authorities

local governments indebtedness and its impact on real estate prices this paper estimates the causal effect of public debt on real estate prices and rental prices we identify shocks to debt of self governed cities in germany and control for potential benefits such

municipal preferences for state imposed amalgamations an empirical study based on the swedish municipal reform of 1952 this paper concerns municipal preferences for state imposed municipal amalgamations focusing on factors that may explain municipal acceptance of or objection to a state imposed amalgamation deci

overlapping jurisdictions substitutes or complements this paper presents a simple model of the demand relationship between the activities undertaken by overlapping governments and uses the framework to estimate the relationship between municipal and county expenditures the empirical results reveal a complementary relationship between county and city general expenditures any public sector expansion effects of monopoly power at the county level will therefore be reinforced by greater municipal spending further expanding the total size of the local public sector on the other hand changes in county police and roads expenditures appear to have no strong stable impact on municipal police and roads expenditures respectively providing no reinforcing or offsetting municipal spending responses to decisions at the county level

centralization and government competition this paper examines the relationship between government size and fiscal centralization with specific focus on the separate influences of centralism and fragmentation on the size of public sector in the united states the empirical findings at the national level provide support to the hypothesis that fiscal decentralization leads to a smaller government the findings at the state and local levels however show no empirical relationship between government size and the degree of centralization

capitalization of property tax differentials within and among municipalities usa most studies evaluating the effect on housing prices of regulatory programs for controlling urban growth use econometric methods hedonic price models without considering the research design aspects of the task this article examines the strengths and

the effects of local authority fiscal decisions on population levels in urban areas cuthbertson k foreman peck j and gripaios p 1982 the effects of local authority fiscal decisions on population levels in urban areas reg studies 16 165 71 the possible effects of local authority tax and expenditure decisions on population levels in local authority jurisdictions have largely been ignored in the uk despite both theoretical and empirical work in the usa which suggests that such effects could well be important this paper examines whether discriminatory local fiscal policies are indeed an important determinant of borough population levels in the uk by first presenting a simple model of population determination and then testing it with 1971 cross section data for the thirty two london boroughs the results suggest that both expenditure and tax policies do have important effects on population levels the composite effects depending on the extent to which expenditure is financed from domestic rates

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

establishing the micro foundations of a macro theory information movers and the competitive local market for public goods e tiebout model of competition in the local market for public goods is an important and controversial theory the current debate revolves around the apparent disparity between macro 5 x empirical studies that show greater efficiency in the supply of public goods in polycentric regions compared to consolidated ones and micro evidence of widespread citizen consumer ignorance which has been used to argue that individual actions cannot plausibly lead to efficiency enhancing competition between local governments we argue that competitive markets can be driven by a subset of informed consumers who shop around between alternate suppliers and produce pressure for competitive outcomes from which all consumers benefit using data from a survey of overfive hundred households we analyze the role of these marginal citizen consumers and incorporate the costs of information gathering and the strategic interests of local governments into the competitive market model

fiscal migration and the london boroughs an amended version of the aronson schwartz model and a more detailed econometric model are used to test the proposition that population movements within the london metropolitan area are related to the value for money provided by local authorities both approaches reveal evidence of a significant relationship which has a variety of implications for policy towards local government finance

homogeneity tests of tiebout sorting a case study at the interface of city and suburb the tiebout hypothesis has stimulated 50 years of research into the relationship between residential location and local taxes and services one line of research has focused on socioeconomic homogeneity as an indicator of tiebout sorting i argue that spatial dependence of socioeconomic variables confounds attempts to attribute sorting to tiebout processes socioeconomic sorting is investigated in queens and nassau counties ny one a jurisdictionally unified central city the other a jurisdictionally fragmented suburban county socioeconomic differences between neighbouring census tracts are quantified throughout the study area and regressed on variables representing general purpose local governments and school districts there is strong evidence of income sorting across small suburban municipalities while the evidence of income sorting across school districts is ambiguous i conclude that income sorting may not be as important at the school district level as generally believed and previous research may have misattributed the political scale of household choice

the tiebout hypothesis in the united states an analysis of black consumer voters 1970 75 this study provides a preliminary empirical investigation as to whether black consumer voters were attracted by the prospect of higher afdc benefits as they made interstate migration decisions over the 1970 75 time period unlike most previous studies there was no compelling evidence of such a attraction of course this study is only preliminary and one could easily make an argument that there are omitted variables from the estimating equations

forecasting housing prices under different market segmentation assumptions three types of market segmentation strategies are available to estimate hedonic housing price models i e no segmentation segmentation by using statistical clustering methods and segmentation by using a priori information this research tests the hypothesis of tiebout theory that individual residential decision making is determined by equilibrium provision of local public goods in accord with the tastes and preferences of residents thereby sorting their housing locations into optimal sub markets forecasting accuracies of eight sub market segmentation strategies and two forecast combining methods are examined by using housing sales data from knox county tennessee usa the results provide empirical support for tiebout theory of optimal housing sub market location in that boundaries drawn using a priori information from local government jurisdictions school districts and expert opinions are more closely aligned with the equilibrium provision of local public goods than boundaries drawn by statistical cl

welfare policies and migration of the poor in the united states an empirical note this paper has investigated the impact of geographic welfare benefit differentials upon migration in the united states unlike other related studies which typically focus upon black migration as a surrogate measure of migration of the poor the present study focuses directly upon migration of the poor per se a variety of reduced form estimates are provided the evidence strongly suggests that the net in migration of the poor is positively and significantly influenced by higher nominal afdc levels and by higher real afdc levels these findings support the welfare magnet hypothesis which alleges that relatively high welfare levels act to attract poor migrants moreover given that poor migrants are attracted non only by high nominal welfare levels but also by high real welfare levels an argument can be made for establishing geographically uniform real welfare benefit levels in the united states this uniformity presumably should act over the long run to eliminate the human resource distortions being caused by the currently prevailing welfare system

municipal incorporation in the united states this article empirically examines the formation of municipalities in the usa it traces change in unincorporated areas over decades to determine how basic dimensions of population heterogeneity aff

estimating property tax capitalization a further comment in recent years an increasingly popular area of empirical investigation has concerned attempts to test tiebout s 1956 hypothesis that allocative efficiency in the provision of public services may be attained through a system of local governments 1 in his seminal contribution to the analysis of the tiebout hypothesis and the capitalization of property taxes oates 1969 reasoned that if consumers are sensitive to the public service benefits and property tax costs associated with home ownership these factors should be reflected in housing prices until recently most studies of the capitalization phenomenon have followed oates s specification in which housing values are regressed on a vector of housing characteristics public service measures and a tax price term 2 as several analysts have noted 3 however attempts to test the tiebout hypothesis by using an oates type equation must certainly lead to failure this is so because in a perfect tiebout equilibrium a marginal increase in housing value brought about by increased provision of public services must necessarily be offset by a marginal decrease in housing value caused by the added tax cost assuming that

does fiscal decentralization constrain leviathan new evidence from local property tax competition this paper reexamines whether fiscal decentralization constrains leviathan government using panel data for pennsylvania we compare actual property tax rates to the leviathan revenue maximizing rates for municipalities school districts and counties using spatial econometric methods we also estimate the degree of spatial dependence at the three levels of local government we find that fiscal decentralization results in stronger intergovernmental competition and lower tax rates we also find evidence of collusion among school districts that exhibit high interdependence but also high tax rates this calls into question the current literature s blind use of spatial dependence as a measure of intergovernmental competition

searching for leviathan an empirical study in several papers and a recent book geoffrey brennan and james buchanan 1977 1978 1980 have put forth a striking and controversial view of the public sector drawing by analogy on the conventional theory of monopoly in the private sector they envision a monolithic government that systematically seeks to exploit its citizenry through the maximization of the tax revenues that it extracts from the economy from this perspective they develop a fiscal constitution whose central purpose is to constrain leviathan by limiting in various ways its access to tax and other fiscal instruments while the leviathan hypothesis has been the source of lively debate and a wide range of policy proposals it has not been the subject of much systematic empirical work or testing this is a matter of some importance since the policy implications of the leviathan view are disturbing to put it mildly in particular brennan and buchanan virtually stand on their heads many of the basic theorems in public finance for an efficient and equitable tax system if in fact the leviathan view is an inaccurate depiction of the functioning of the public sector the introduction of their policy proposals is likely to make a sorry mess of the fiscal system the leviathan model does however have some straightforward implications for observable fiscal behavior it is the purpose of this paper to examine one of these testable implications brennan and buchanan stress that fiscal decentralization is itself a powerful constraint on leviathan competition among governments in the context of the interjurisdictional mobility of persons in pursuit of fiscal gains can offer partial or possibly complete substitutes for explicit fiscal constraints on the taxing power 1980 p 184 such competition among governments in a federal system that places heavy reliance on local fiscal decisions will greatly limit the capacity of leviathan to channel resources into the public sector in short as indicated by the epigraph to this paper the leviathan model implies that other things equal the size of the public sector should vary inversely with the extent of fiscal decentralization 2

quasi experimental estimates of the effect of class size on achievement in norway using a comprehensive norwegian administrative database we exploit independent quasi experimental methods to estimate the effect of class size on student achievement at the end of lower secondary school identification based on maximum class size rules and population variation and variations on these methods give very similar estimates we cannot reject that the class size effect is equal to zero and can rule out effects as small as 1 5 percent of a standard deviation for a one student change in class size during three consecutive years