marshall s scale economies using panel data this paper estimates plant level production functions for machinery and high tech industries that allow for scale externalities from other plants in the same industry locally and from the scale or diversity of local economic activity outside the own industry the paper finds that the count of other own industry plants representing a count of local information spillover sources has strong productivity effects in high tech but not machinery industries single plant firms both benefit more from and generate greater external benefits than corporate plants given their greater reliance on external environments on dynamic externalities high tech single plant firms benefit also from the scale of past own industry activity i find little evidence of economies from the diversity or scale of local economic activity outside the own industry

tax base effects and fiscal externalities of local capital taxation evidence from a panel of german jurisdictions abstract this paper provides empirical evidence on the tax base effects of local capital taxation using a large panel of german municipalities it tests whether both the local tax rate and the tax rate in adjacent jurisdictions affect the local tax base the results obtained from a spatial gmm approach confirm a strong negative impact of the local tax rate whereas the average tax rate of neighboring municipalities proves insignificant only if interacted with the relative population size of neighbors a significant positive impact is found indicating that externalities from taxing decisions of adjacent jurisdictions are experienced only by relatively small municipalities

are corporate tax rates or countries converging abstract the statutory rate and effective tax rate imposed on corporation income as well as the dispersion of these rates began to decline in the 1980s is this due to changes in the domestic determinants of corporate taxation or increases in international pressures for tax competition this paper finds clear evidence that the corporate tax rate is insulated from a country s revenue needs across countries there is no association of the expenditure gdp ratio with the corporate statutory rate and only weak evidence of a positive association with the average rate there is suggestive but not definitive evidence that the domestic role of the corporate tax as a backstop to the individual income tax is important across countries there is indeed a strong association between the top individual rate and the top statutory corporate rate there is intriguing evidence about the role of international competitive pressures on corporate taxation measures of openness are negatively associated with statutory corporate rates although not with revenues collected as a fraction of gdp strikingly larger more trade intensive countries do collect more corporate tax but this may be because these countries are more attractive venues for investment

does competition for capital discipline governments decentralization globalization and public policy competition among countries or regions within them to attract mobile capital is often thought to discipline their governments motivating them to invest more in infrastructure reduce waste and corruption and spend less on non productive public goods the result should be convergence on business friendly policies we argue that this requires an assumption units start out very similar that is often unrealistic if units are heterogeneous in natural resources geographical location inherited human capital or infrastructure capital mobility often weakens discipline on the poorlyendowed units this may help explain disappointing results of liberalizing capital flows within russia and sub saharan africa jel f36 h73 h87

why hasn t tax competition triggered a race to the bottom some quantitative lessons from the eu abstract the integration of european financial markets in the early 1980s created an environment of near perfect capital mobility across countries that had harmonized indirect taxes but maintained large differences in factor taxes the years that followed witnessed several rounds of competition in capital taxes with puzzling results instead of the dreaded race to the bottom in capital taxes the uk lowered its capital tax to a rate closer to those of france germany and italy while capital taxes changed slightly in these countries the uk increased its labor tax marginally but the other countries increased theirs sharply this paper shows that these results are consistent with the quantitative predictions of a dynamic neoclassical general equilibrium model of tax competition that incorporates the key international externalities of tax policy operating via relative prices wealth distribution and fiscal solvency tax competition is modeled as a one shot game over time invariant capital taxes with dynamic payoffs relative to a status quo calibrated to european data the calibration is preceded by an empirical analysis that shows that the relationship linking taxes to labor supply and the investment rate in the model are in line with empirical evidence and that domestic taxes seem to respond to foreign taxes the solutions of the games show that when countries compete over capital taxes adjusting labor taxes to maintain fiscal solvency there is no race to the bottom and the nash equilibrium is close to observed taxes in contrast if consumption taxes adjust to maintain fiscal solvency competition over capital taxes triggers a race to the bottom but this outcome entails large welfare gains surprisingly the gains from coordination are small in all of these experiments

centralized versus decentralized provision of local public goods a political economy approach abstract this paper takes a fresh look at the trade off between centralized and decentralized provision of local public goods it argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions when spending decisions are made by a legislature of locally elected representatives this conflict of interest will play out in the legislature depending on precisely how the legislature behaves the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts the extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending thus the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending but for different reasons than suggested in the existing literature

the comparative advantage of cities abstract what determines the distributions of skills occupations and industries across cities we develop a theory to jointly address these fundamental questions about the spatial organization of economies our model incorporates a system of cities their internal urban structures and a high dimensional theory of factor driven comparative advantage it predicts that larger cities will be skill abundant and specialize in skill intensive activities according to the monotone likelihood ratio property we test the model using data on 270 us metropolitan areas 3 to 9 educational categories 22 occupations and 19 industries the results provide support for our theory s predictions

measuring urban economic density agglomeration economies are at the heart of urban economics driving the existence and extent of cities and are central to structural transformation and the urbanization process this paper evaluates the use of different measures of economic density in assessing urban agglomeration effects by examining how well they explain household income differences across cities and neighborhoods in six african countries the paper examines simple scale and density measures and more nuanced ones that capture the extent of clustering within cities the evidence suggests that more nuanced measures attempting to capture within city differences in the extent of clustering do no better than a simple density measure in explaining income differences across cities at least for the current degree of accuracy in measuring clustering however simple city scale measures such as total population are inferior to density measures and to some degree misleading the analysis finds large household income premiums from being in bigger and particularly denser cities over rural areas in africa indicating that migration pull forces remain very strong in the structural transformation process moreover the marginal effects of increases in urban density on household income are very large with density elasticities of 0 6 in addition to strong city level density effects the analysis finds strong neighborhood effects for household incomes overall city density and density of the neighborhood matter

skills in the city this paper documents the allocation of skills across cities and estimates the impact of agglomeration on the hedonic prices of worker skills we find that large cities are more skilled than are small cities but only to a modest degree we also show that the increase in productivity associated with agglomeration as measured by the urban wage premium is larger for workers with stronger cognitive and people skills in contrast motor skills and physical strength are not rewarded to a greater degree in large cities urbanization thus enhances thinking and social interaction rather than physical abilities these results are robust to a variety of estimation strategies including using nlsy variables that control for worker quality and a worker msa fixed effect specification

race specific urban wage premia and the black white wage gap abstract we establish a novel empirical fact about the black white wage gap looking both across and within metropolitan areas increasing city size or employment density is associated with a larger black white wage gap the estimated effects represent between 9 and 18 of recent estimates of the black white wage gap using a variety of techniques we demonstrate that our within city relationship is unlikely to be driven by racial differences in unobserved ability finally we present evidence suggestive of a role for race specific networks in explaining these differences in the black white wage gap

capital budgets borrowing rules and state capital spending abstract this paper compares the level and composition of government spending in u s states that maintain separate budgets for capital and operating expenditures with that in states that employ unified budgets it also investigates the effects of pay as you go financing rules for capital projects the empirical findings suggest that states with separate capital budgets spend more on public capital projects than comparable states with unified budgets there is no evidence that the presence or absence of a capital budget affects the level of non capital spending pay as you go requirements for financing capital projects are associated with lower levels of both capital and non capital spending

tax competition among u s states racing to the bottom or riding on a seesaw abstract dramatic declines in capital tax rates among u s states and european countries have been linked by many commentators to tax competition an inevitable race to the bottom and underprovision of local public goods this paper analyzes the reaction of capital tax policy in a given u s state to changes in capital tax policy by other states our study is undertaken with a novel panel data set covering the 48 contiguous u s states for the period 1965 to 2006 and is guided by the theory of strategic tax competition the latter suggests that capital tax policy is a function of foreign out of state tax policy preferences for government services and home state and foreign state economic and demographic conditions the slope of the reaction function the equilibrium response of home state to foreign state tax policy is negative contrary to casual evidence and many prior empirical studies of fiscal reaction functions this result which stands in contrast to most published findings is due to two critical elements that allow for delayed responses to foreign tax changes and responses to aggregate shocks omitting either of these elements leads to a misspecified model and a positively sloped reaction function our results suggest that the secular decline in capital tax rates at least among u s states reflects synchronous responses among states to common shocks rather than competitive responses to foreign state tax policy while striking given prior empirical findings these results are fully consistent with the implications of the theoretical model developed in this paper and presented elsewhere in the literature rather than racing to the bottom our findings suggest that states are riding on a seesaw consequently tax competition may lead to an increase in the provision of local public goods and policies aimed at restricting tax competition to stem the tide of declining capital taxation are likely to be ineffective

inequality and city size between 1979 and 2007 a strong positive monotonic relationship between wage inequality and city size has developed this paper investigates the links between this emergent city size inequality premium and the contemporaneous nationwide increase in wage inequality after controlling for the skill composition of the workforce across cities of different sizes we show that at least 23 percent of the overall increase in the variance of log hourly wages in the united states from 1979 to 2007 is explained by the more rapid growth in the variance of log wages in larger locations relative to smaller locations this influence occurred throughout the wage distribution and was most prevalent during the 1990s more rapid growth in within skill group inequality in larger cities has been by far the most important force driving these city size specific patterns in the data differences in the industrial composition of cities of different sizes explain up to one third of this city size effect these results suggest an important role for agglomeration economies in generating changes in the wage structure during the study period

a theory of interregional tax competition a general equilibrium model is constructed to study tax competition where local governments compete for capital by holding down property tax rates and public expenditure levels an exact definition of tax competition is provided and both the existence and nonexistence of tax competition are shown to be theoretically possible it is argued however that tax competition must occur under empirically reasonable conditions inefficiency in public production is also explicitly modeled the amount of capital used to produce a given level of public service output is shown to be greater than that which is required to minimize costs evaluated at the prices facing private firms

international tax competition and the deficit bias i analyze the dynamic effects of tax competition on public budget deficits i find that stronger tax competition leads to a fiscal deficit bias at the early stages of financial liberalization when countries differ in terms of capital mobility further liberalization leads to external imbalances and diverging fiscal deficits while corporate tax rates converge consistent with theory i find that stronger tax competition increases deficits in a sample of oecd countries controlling for tax revenues and other standard determinants of fiscal deficits jel e62 f62

growth rate heterogeneity and the covariance structure of life cycle earnings using u s panel data on adult males i compare the profile heterogeneity model of earnings dynamics in which the earnings experience profile varies across individuals to a competing model in which earnings has a unit root the latter specification enjoys increasing popularity among researchers my analysis questions this favor suggesting the profile heterogeneity model provides a more consistent representation of the data i also provide new estimates of the variation in earnings growth rates previous evidence is from relatively unrepresentative samples individuals one standard deviation above the mean enjoy a 20 30 earnings advantage in just 10 years

the incentive effect of fiscal equalization transfers on tax policy abstract a theoretical analysis considers the impact of a typical system of redistributive fiscal equalization transfers on the tax effort of local jurisdictions more specifically it shows that the marginal contribution rate i e the rate at which an increase in the tax base reduces those transfers might be positively associated with the local tax rate while the volume of grants received is likely to be inversely related to the tax rate these predictions are tested in an empirical analysis of the tax policy of german municipalities in order to identify the incentive effect the analysis exploits discontinuities in the rules of the fiscal equalization system as well as policy changes the empirical results support the existence of an incentive effect suggesting that the high marginal contribution rates induce the municipalities to set significantly higher business tax rates compared with a situation without fiscal equalization

short run momentum long run mean reversion and excess volatility an elementary housing model abstract we propose an elementary housing model that replicates the key properties of housing bubbles namely short run momentum long run mean reversion and excess volatility we analytically proof that such dynamics can only emerge if homebuyers place sufficient weight on extrapolative expectations

optimal fiscal federalism in the presence of tax competition abstract this paper models the optimal division of public goods provision between central and regional governments in an economy with interregional tax competition regional provision is inefficient because governments compete for scarce capital by lowering their capital taxes and public good levels to inefficiently low levels on the other hand central provision is inefficient because it is determined by the minimum winning coalition within a legislature the optimal degree to which public good provision should be decentralized depends on a tradeoff between these inefficiencies in our main model complete centralization is never optimal regional governments should supply some public goods

welfare improving competition for mobile capital abstract this paper constructs a model in which regions provide firms with a public input financed by taxes that residents choose to levy on capital and wage income self interested government officials face incentives to provide the public input because its positive impact on labor and capital productivity leads to larger tax bases the positive relation between tax revenue and the public input is strengthened if capital is mobile across regions government officials engage in expenditure competition leaving residents better off than they would be in the absence of capital mobility to further enhance public sector incentives residents may choose to tax capital income at a positive rate although investment is discouraged

the pre programme earnings dip and the determinants of participation in a social programme implications for simple programme evaluation strategies the key to estimating the impact of a programme is constructing the counterfactual outcome representing what would have happened in its absence this problem becomes more complicated when agents such as individuals firms or local governments self select into the programme rather than being exogenously assigned to it this paper uses data from a major social experiment to identify what would have happened to the earnings of self selected participants in a job training programme had they not participated in it we investigate the implications of these earnings patterns for the validity of widely used before after and difference in differences estimators

concrete agglomeration benefits do roads improve urban connections or just attract more people cities with more roads are more productive however it can be unclear whether roads increase productivity directly through improved intra urban connections or indirectly by attracting more people our theory suggests that population responses may obscure the direct connectivity effects of roads indeed conditional on population size highway density does not affect productivity in a sample of us metropolitan areas however when exploiting exogenous variation in urban populations we find that highway density improves agglomeration benefits moving from the 50th to the 75th percentile of highway density increases the productivity to population elasticity from 2 to 4 moreover travel based measures outperform population size as a measure of agglomeration externalities

does the urban wage premium differ by pre employment status this paper investigates whether the density of local labour markets in germany impacts on the wage of new employment relationships and whether corresponding urbanization economies differ significan

public input competition abstract public investment in infrastructure may help create agglomeration economies by attracting mobile factors such as skilled labour competition among regions in public investment can then be destructive this paper analyzes the nash equilibria to a simple model of public input competition even though the regions are assumed identical the equilibrium may not be symmetric the problem with non cooperative behaviour is not only that regions invest too much but that too many regions may choose to invest depending on the parameter values the nash equilibrium may be efficient may be inefficient or may not exist at least not in pure strategies better mobility among regions leads to more aggressive competition the analysis suggests that rents from public investment may be dissipated by governments competition to attract mobile factors

the global spatial distribution of economic activity nature history and the role of trade we explore the role of natural characteristics in determining the worldwide spatial distribution of economic activity as proxied by lights at night observed across 240 000 grid cells a parsimonious set of 24 physical geography attributes explains 47 of worldwide variation and 35 of within country variation in lights we divide geographic characteristics into two groups those primarily important for agriculture and those primarily important for trade and confront a puzzle in examining within country variation in lights among countries that developed early agricultural variables incrementally explain over 6 times as much variation in lights as do trade variables while among late developing countries the ratio is only about 1 5 even though the latter group is far more dependent on agriculture correspondingly the marginal effects of agricultural variables as a group on lights are larger in absolute value and those for trade smaller for early developers than for late developers we show that this apparent puzzle is explained by persistence and the differential timing of technological shocks in the two sets of countries for early developers structural transformation due to rising agricultural productivity began when transport costs were still high so cities were localized in agricultural regions when transport costs fell these agglomerations persisted in late developing countries transport costs fell before structural transformation to exploit urban scale economies manufacturing agglomerated in relatively few often coastal locations consistent with this explanation countries that developed earlier are more spatially equal in their distribution of education and economic activity than late developers

does federalism lead to excessively high taxes the relative strengths of vertical and horizontal tax externalities turn on the balance between the interest responsiveness of the supply of savings and demand for capital the extent to which immobile factors are taxed by the states and the strength of preferences between federal and state expenditures the vertical externality will dominate if the aggregate tax base of the federation is responsible to the state tax instrument tax interactions in federations are more complex than has often been supposed

learning by working in big cities individual earnings are higher in bigger cities we consider three reasons spatial sorting of initially more productive workers static advantages from workers current location and learning by working in bigger cities using rich administrative data for spain we find that workers in bigger cities do not have higher initial ability as reflected in fixed effects instead they obtain an immediate static premium and accumulate more valuable experience the additional value of experi ence in bigger cities persists after leaving and is stronger for those with higher initial ability this explains both the higher mean and greater dispersion of earnings in bigger cities

competing in taxes and investment under fiscal equalization the paper considers a model of federation with two heterogeneous regions that try to attract the capital by competing in capital income taxes and public investment that enhance the productivity of capital regions choices determine allocation of capital across the regions and their revenues under a tax sharing scheme this framework allows for the examination of different approaches to fiscal equalization schemes boadway r flatters f 1982 efficiency and equalization payments in a federal system of government a synthesis and extension of recent results canadian journal of economics 15 613 633 weingast b r 2006 second generation fiscal federalism implication for decentralized democratic governance and economic development working paper hoover institution stanford university we show that tax competition distorts downwards public investments and that the equalization grants discourage public investments with a little effect on equilibrium taxes however the equalization schemes remain beneficial not only for the federation and under a low degree of regional asymmetry also for each region c 2008 elsevier b v all rights reserved

culture and taxes we propose a difference in differences strategy to identify the existence of interjurisdictional tax competition our strategy rests on differences between desired tax levels determined by culture specific preferences and equilibrium tax levels determined by fiscal externalities and by preferences while preferences differ systematically between french speaking and german speaking swiss municipalities local income tax burdens exhibit smooth spatial gradients to qualify the empirical evidence we develop a theoretical model of strategic tax setting by local governments that anticipate the effects of taxes on the per capita income and the median hedonic income two inextricable consequences of the sorting of heterogeneous individuals

cities workers and wages a structural analysis of the urban wage premium workers earn higher wages in cities vs rural areas this gap could arise because cities make workers more productive or it could be the result of a non random selection of workers into cities based on their ability and their endogenous history of career choices to untangle these issues this paper estimates a dynamic programming model which embeds the choice of residing in a city or rural area within a model of career choices over time after controlling for all the sources of selection and endogeneity the estimates indicate that a given worker does earn more in the city for white collar work but not for blue collar work in addition city work experience is found to be worth more than rural work experience in the rural area for white collar work but not for blue collar work these results support the interpretation that cities make white collar workers more productive and suggest that workers may consider moving to the city not only in terms of locational choice but also as a form of human capital investment copyright 2007 wiley blackwell

does traffic congestion reduce employment growth abstract this paper examines the impact of traffic congestion on employment growth in large u s metropolitan areas an historic highway plan and political variables serve as instruments for endogenous congestion the results show that high initial levels of congestion dampen subsequent employment growth this finding suggests that increasing the efficiency of public infrastructure can spur local economies counterfactual estimates show that the employment growth returns from modest capacity expansion or congestion pricing are substantial

spatial wage disparities sorting matters spatial wage disparities can result from spatial differences in the skill composition of the workforce in non human endowments and in local interactions to distinguish between these explanations we estimate a model of wage determination across local labour markets using a very large panel of french workers we control for worker characteristics worker fixed effects industry fixed effects and the characteristics of the local labour market our findings suggest that individual skills account for a large fraction of existing spatial wage disparities with strong evidence of spatial sorting by skills interaction effects are mostly driven by the local density of employment not controlling for worker heterogeneity leads to very biased estimates of interaction effects endowments only appear to play a small role

vertical versus horizontal tax externalities an empirical test abstract we study taxation externalities in federations of benevolent governments where different hierarchical government levels tax the same base one can observe two types of externalities a horizontal externality working among governments of the same level and leading to tax rates that are too low compared to the social optimum and a vertical externality working between different levels of government and leading to suboptimally high tax rates building on the model of keen and kotsogiannis keen michael j kotsogiannis christos 2002 does federalism lead to excessively high taxes american economic review 92 1 363 370 we derive a discriminating hypothesis to distinguish vertical and horizontal tax externalities based on measurable variables this test is applied to a panel data set on local taxes in a sample of swiss municipalities that feature direct democratic fiscal decision making so as to maximize the correspondence with the benevolent governments of the theory we find that vertical externalities dominate they are thus an observed empirical phenomenon as well as a notable extension to the theory of tax competition

the economics of urban density density boosts productivity and innovation improves access to goods and services reduces typical travel distances encourages energy efficient construction and transport and allows broader sharing of scarce urban amenities however density is also synonymous with crowding and makes living and moving in cities more costly we explore the appropriate measurement of density and describe how it is both a cause and a consequence of the evolution of cities we then discuss whether and how policy should target density and why in practice the tradeoff between its pros and cons is unhappily resolved by both market and political forces

how low business tax rates attract mne activity municipality level evidence from germany most existing empirical evidences on the impact of profit taxation on multinational firm activity are based on cross country data one major drawback of such data is that countries differ not only with regard to taxes but also with other dimensions which might be hard to capture by means of observable characteristics we compile a database of more than 11 000 municipalities in germany to analyze the sensitivity of location decisions of foreign mnes in germany with respect to business tax rates which are levied directly by the municipalities we find that higher business tax rates have a negative effect on three alternative measures of mne activity after controlling for other determinants of firm location decisions the number of foreign mnes mne employment and mne fixed assets our results suggest that tax competition among regional entities for foreign investors is a game of a few in cross section instrumental variable regressions a one percent reduction of the municipal business tax rate equivalent to a decline by about 0 14 percentage points leads to an increase in the number of legally independent foreign owned firms by about 0 45 the average municipality would have to reduce its business tax rate by about 2 2 percentage points or 15 from its average level to attract one foreign mne hence municipalities need to be attractive in other dimensions to be able to use tax instruments to attract foreign firms at the margin

a dynamic theory of public spending taxation and debt this paper presents a dynamic political economy theory of public spending taxation and debt policy choices are made by a legislature consisting of representatives elected by geographically defined districts the legislature can raise revenues via a distortionary income tax and by borrowing these revenues can be used tofinance a national public good and district specific transfers interpreted as pork barrel spending the value of the public good is stochastic reflecting shocks such as wars or natural disasters in equilibrium policy making cycles between two distinct regimes business as usual in which legislators bargain over the allocation of pork and responsible policy making in which policies maximize the collective good transitions between the two regimes are brought about by shocks in the value of the public good in the long run equilibrium tax rates are too high and too volatile public good provision is too low and debt levels are too high in some environments a balanced budget requirement can improve citizen welfare

reevaluating agricultural productivity gaps with longitudinal microdata recent research has pointed to large gaps in labor productivity between the agricultural and nonagricultural sectors in low income countries as well as between workers in rural and urban areas most estimates are based on national accounts or repeated cross sections of micro survey data and as a result typically struggle to account for individual selection between sectors this paper contributes to this literature using long run individual level panel data from two low income countries indonesiaand kenya accounting for individual fixed effects leads to much smaller estimated productivity gains from moving into the non agricultural sector or urban areas reducing estimated gaps by over80 percent per capita consumption gaps between non agricultural and agricultural sectors as well as between urban and rural areas are also close to zero once individual fixed effects are included estimated productivity gaps do not emerge up to five years after a move between sectors nor are they larger in big cities we evaluate whether these findings imply a re assessment of the currentconventional wisdom regarding sectoral gaps discuss how to reconcile them with existing crosssectional estimates and consider implications for the desirability of sectoral reallocation of labor

understanding the city size wage gap in 2000 wages of full time full year workers were more than 30 percent higher in metropolitan areas of over 1 5 million people than rural areas the monotonic relationship between wages and city size is robust to controls for age schooling and labor market experience in this paper we decompose the city size wage gap into various components we propose an on the job search model that incorporates latent ability search frictions firm worker match quality human capital accumulation and endogenous migration between large medium and small cities counterfactual simulations of the model indicate that variation in returns to experience and differences in wage intercepts across location type are the most important mechanisms contributing to the overall city size wage premium steeper returns to experience in larger cities is more important for college graduates while differences in wage intercepts is more important for high school graduates sorting on unobserved ability within education group and differences in labor market search frictions and distributions of firm worker match quality contribute little or slightly negatively to observed city size wage premia in both samples

fiscal competition and public debt the existing theoretical literature on fiscal competition has to a large extent ignored the role of government debt as a determinant of taxes and productive public spending we develop a simple model of fiscal competition with government borrowing if a default on government debt is no option initial debt levels play no role in fiscal competition this neutrality result is overturned when a default is possible a government that is constrained in its borrowing due to a possible default responds optimally by lowering spending on durable public infrastructure which in turn induces more aggressive tax setting a rise in exogenous firm mobility reinforces the link between legacy debt and fiscal competition our model may help explain the observation that highly indebted countries in europe have decreased corporate tax rates over proportionally our model may also be useful for evaluating decentralization reforms in which the power to tax firms is devolved to lower levels of overnments which differ in their initial debt levels

testing for strategic interaction among local governments the case of growth controls this paper helps to fill a gap in the public economics literature by providing empirical evidence on strategic interaction among local governments using the methodology of case et al journal of public economics 52 285 307 1993 the paper focuses on the adoption of growth control measures by cities in california and looks for evidence of policy interdependence in these choices the data are drawn from an elaborate survey of growth control practices in california cities conducted by glickfeld and levine regional growth local reaction lincoln institute of land policy cambridge ma 1992 the survey results are used to compute an index of the stringency of growth controls in each city which serves as the dependent variable for the study

do countries compete over corporate tax rates this paper tests whether oecd countries compete with each other over corporate taxes in order to attract investment we develop two models with firm mobility countries compete only over the statutory tax rate or the effective average tax rate while with capital mobility countries compete only over the effective marginal tax rate we estimate the parameters of reaction functions using data from 21 countries between 1983 99 we find evidence that countries compete over all three measures but particularly over the statutory tax rate and the effective average tax rate this is consistent with a belief amongst governments that location choices by multinational firms are discrete we also find evidence of concave reaction functions consistent with the model outlined in the paper

the feasibility and importance of adding measures of actual experience to cross sectional data collection we use michigan panel study of income dynamics data and data from a 2008 telephone survey of adults conducted by westat for the princeton data improvement initiative pdii to explore the importance and feasibility of adding retrospective questions about actual work experience to cross sectional data sets we demonstrate that having such actual experience data is important for analyzing women s postschool human capital accumulation residual wage inequality and the gender pay gap further our pdii survey results show that it is feasible to collect actual experience data in cross sectional telephone surveys like the march current population survey s annual supplement

pigou tiebout property taxation and the underprovision of local public goods abstract pigou s proposition that the use of distorting taxes rather than neutral head taxes reduces public service levels is examined in this paper a simple model with a national system of competing local governments is utilized to demonstrate that the use of a distorting property tax on mobile capital decreases the level of residential public services the case where public services are an intermediate producer good is also considered

identifying local tax mimicking with administrative borders and a policy reform abstract this paper exploits an exogenous reform of the local fiscal equalization scheme in the german state of north rhine westphalia nrw in 2003 to identify tax mimicking by municipalities in the neighboring state of lower saxony nds the reform caused municipalities in nrw to increase their business and property tax rates i study within the difference in difference dd and the spatial lag sl frameworks whether municipalities in nds bordering nrw did react to the exogenous tax increases by nrw municipalities the dd and sl results suggest that there are no interactions in tax rates in contrast traditional sl regressions that rely on variation in neighbors demographic and political characteristics for identification provide strong evidence for immediate strategic interactions these results indicate that most of the existing literature overestimates the importance of local tax mimicking

misalignment of productivity and wages across regions evidence from belgium abstractthis paper is one of the first to estimate how regions affect the productivity wage cost and cost competitiveness i e the productivity wage gap of firms detailed linked employer employee panel data for belgium and the hellerstein neumark framework are used to estimate dynamic models at the establishment level the findings show that interregional differences in productivity and wages are significant but to a large extent due to drivers at the individual and or firm level the research provides evidence that the specificity of the brussels region can be linked to its higher density compared with the rest of belgium robustness tests suggest that the relatively better ceteris paribus performance of firms in brussels is limited to the service sector

do low paid workers benefit from the urban escalator evidence from british cities cities are characterised as places of increased human capital accumulation dynamic labour markets and faster wage growth in short places where workers can get ahead studies suggest that urban w

do higher corporate taxes reduce wages micro evidence from germany because of endogeneity problems very few studies have been able to identify the incidence of corporate taxes on wages we circumvent these problems by using an 11 year panel of data on 11 441 german municipalities tax rates 8 percent of which change each year linked to administrative matched employer employee data consistent with our theoretical model we find a negative effect of corporate taxation on wages a 1 euro increase in tax liabilities yields a 77 cent decrease in the wage bill the direct wage effect arising in a collective bargaining context dominates while the conventional indirect wage effect through reduced investment is empirically small due to regional labor mobility high and medium skilled workers who arguably extract higher rents in collective agreements bear a larger share of the corporate tax burden

housing urban growth and inequalities the limits to deregulation and upzoning in reducing economic and spatial inequality urban economics and branches of mainstream economics what we call the housing as opportunity school of thought have been arguing that shortages of affordable housing in dense agglomerations r

earnings dynamics and inequality among canadian men 1976 1992 evidence from longitudinal income tax records using an extraordinary database drawn from longitudinal income tax records we decompose canada s growth in earnings inequality into its persistent and transitory components we find that the growth in earnings inequality reflects both an increase in long run inequality and an increase in earnings instability the canadian data strongly reject several restrictions commonly imposed in the u s literature and they also suggest that imposing these evidently false restrictions may lead to distorted inferences about earnings dynamics and inequality trends

relocation of the rich migration in response to top tax rate changes from spanish reforms a spanish reform granted regions the authority to set income tax rates resulting in substantial tax differentials using administrative data we find that conditional on moving taxes have a signi

jeux sans frontieres tax competition and tax coordination when countries differ in size closer international integration is putting increasing pressure on existing national tax structures this paper uses a simple two country model to address a range of consequent policy concerns focusing particularly on the role of country size differences in size exacerbate the inefficiency from noncooperative behavior harming both countries the smaller country loses from harmonization to any tax rate between those set in the noncooperative equilibrium but both countries gain from the imposition of a minimum tax anywhere in that range the fully optimal response to freer cross border trade however may be to do nothing jel h20 h77

selection in initial and return migration evidence from moves across spanish cities this paper investigates the sorting of more productive workers into denser cities using administrative data for spain that fol low individuals continuously throughout their working lives migrants who move to denser cities are positively selected in terms of educa tion occupational skills and individual productivity as proxied by pre migration position in the local earnings distribution however not everyone is able to benefit equally from denser cities and this leads to a second round of sorting returnees are not only ex ante less productive than permanent migrants but are also those who following the first move have least boosted up their earnings in denser cities

fiscal competition and the pattern of public spending much attention has been given to the impact of fiscal competition on the level of public expenditure but relatively little to the impact on its composition using a broadly familiar and reasonably rich model of fiscal competition in the presence of mobile capital this paper establishes a systematic bias in public spending patterns starting from the non cooperative equilibrium and holding tax rates constant welfare would be improved by a coordinated reduction in the provision of local public inputs and a corresponding increase in the public provision of local public goods benefiting immobile consumers c 1997 elsevier science s a

urban economics for the developing world an introduction this is an introduction to the special issue of the journal of urban economics on urbanization in developing countries past and present we argue that the rapid urbanization and the rise of cities in the developing world demand new avenues of research and much more research to deal with the urban issues facing billions of people across the world that current work barely covers this issue contains papers which move in that direction and signals a commitment by the journal to pursue this agenda