title: Essays in Public Economics: Spatial Variations in Public Policy
title: Aufsätze zur Finanzwissenschaft: Räumliche Variationen von Politikmaßnahmen
Creators: name: Schneider, Luisa
Publisher: name: Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU)
Year: 2025

description: In this dissertation, I empirically investigate spatial variations in different public policies in three self-contained chapters. As a federalist country, Germany offers an ideal testing ground for this investigation. The 16 federal states are endowed with own competencies regarding legislation, administration and jurisdiction, so spatial variations in public policy are inherent to the system. All three chapters utilize spatial variations in public policies to contribute to the questions of how governments make policy decisions and what decisions they should make. Chapter 1, which is co-authored with Matthias Wrede, presents effects of real estate transfer taxes (RETT) on spatial mobility decisions in Germany. A federal reform entitled the German federal states to set their RETT levels independently, which in turn triggered a wave of tax increases across these sub-national territories. We thus exploit the spatial variation of this public policy and build our empirical analysis investigating responses to RETTs in two broader steps: First, we conduct a municipality level analysis of aggregated spatial mobility. Second, an individual level investigation of residential mobility sheds light on the differential responses to RETTs of owner-occupiers and tenants. The first part of chapter 1, the municipality level analysis sets out to estimate the effects of tax increases on annual moves into municipalities, relative to a municipality’s total population. We employ administrative data and implement two-way fixed effects (TWFE) estimations, which are expanded through spatial regression discontinuity (RD) designs. The spatial RD design focuses on municipalities located on opposing sides of state borders, yet in close proximity. Specifically, we compare relocations into municipalities in states with tax increases to those in states without increases. Our estimates show that municipalities register a lower number of incoming citizens, if they experience a tax increase. To better understand which types of moves are affected by tax changes, we augment the municipality level analysis with individual level survey data in the second part of chapter 1. We implement competing risk hazard models which record the time individuals stay in their dwelling and tenure type. The empirical models then estimate the probability of a move into a new owner-occupied or rented dwelling and assess the effect of RETT levels on this likelihood. Our findings demonstrate that, for owner-occupiers, higher RETT levels lower the likelihood of moving into a new owned dwelling. For tenants, we find a negative relationship between RETT levels and moves into owning, which is however not statistically significant. In fact, our analysis points to the crucial role of macroeconomic factors for this specific transition: real estate price levels, mortgage rates and inflation rates emerge as driving forces here. In joint work with Daniela Wech and Matthias Wrede, chapter 2 analyzes the relationship between the party affiliation of politicians at different levels of government and the spatial distribution of project grants. In particular, we evaluate whether projects are granted higher amounts in periods where the state they are located in is politically aligned with the federal government, which gives out the grant. We apply a fixed effects estimation approach to our dataset covering research, development and innovation projects which received federal funding by federal ministries. The results show that political alignment between receiving state government and giving federal government (ministry) is associated with a substantial increase of the funding amount of projects located in the respective states. This particularly applies to smaller projects. Chapter 3 builds on chapter 2 and investigates political alignment on the more fine-grained geographical level of municipalities. Moreover, it evaluates the adequacy of freedom of information (FOI) laws as a policy instrument to address political alignment distortions. One prime goal of FOI laws is to hold politicians accountable by granting access rights to government records to citizens. In Germany, the introduction of FOI regulation varies spatially across federal states and timely across years. I exploit this setting in my empirical analysis and study how advances in the provision of information affect the geographical allocation and distortion of state investment transfers to German municipalities. The analysis proceeds in two steps: First, I test whether state governments channel higher amounts of investment transfers to municipalities which are governed by politically aligned mayors. Second, I analyze whether FOI laws impact this distortion. The fixed effects estimations in this chapter reveal that politically aligned municipalities receive higher investment transfer amounts. This relationship holds for transfer amounts between €600,000 and €2 million. Additionally, I find no effect of FOI laws: The empirical results suggest that FOI laws neither impact the allocation of intergovernmental investment transfers, nor political distortions of these payments. Overall, the findings in this chapter suggest that the German FOI laws are not effective in reducing the political manipulation of intergovernmental transfers in the form of alignment biases.