Previous empirical studies have made little attempt to test whether the fiscal response to intergovernmental aid is asymmetric. This paper tests the asymmetric response hypothesis for 66 Pennsylvania county governments over the 1978-88 period. This marked a period of retrenchment in which counties experienced frequent annual reductions in federal aid. The local government revenue response to federal aid was found to be asymmetric. The reduction in federal aid induced a reduction in own-source revenue. The results support the notion that taxpayers prefer fiscal restraint when permanent loss of aid occurs.

This study is an empirical investigation of the effect of library volunteers on public library demand for paid workers. Unlike previous studies, it estimates the impacts on different types of paid labor. The main purpose is to test whether volunteer labor replaced or complemented paid employees. A translog cost function is used to derive cost shares and elasticities of substitution for Pennsylvania public libraries. Cross-elasticity estimates of substitution and input demand suggest a strong complementary relation between volunteers and professional workers. Most of the other Allen cross elasticities were not statistically significant. None of the estimates indicate that paid labor was being replaced by volunteers. Copyright © 2007 John Wiley & Sons, Ltd.

County governments in Pennsylvania have had the option to repeal the intangible property tax since 1978. As of 1992, 27 of Pennsylvania's 66 counties had repealed it. An attempt is made to explain empirically the probability of repeal in this paper. The empirical model accounts for a large part of the variation across counties. The results show that the probability of levying the intangible property tax is positively related to the projected change in the real estate tax rate. Further, it was found that revenue diversification and several taste and political variables significantly influence the repeal decision. These findings are consistent with those of previous tax adoption studies. The evidence, however, does not show the exportation of real estate taxes to have the expected effect on the probability of repeal.

The Laffer curve analysis suggests a possible policy conflict between short-run revenue maximization and long-run fiscal health. This paper estimates short-run and long-run property tax base elasticity in order to test whether such a conflict exists for the property tax in central cities. A stock adjustment model is used and separate time-series estimates for four New York State central cities lend empirical support to such a conflict. The results show that while disincentive effects associated with property tax rate increases are not strong enough to reduce property tax revenue in the short-run, they are substantial enough to reduce long-run revenue in all but one city. The paper also tests for asymmetric response to property tax rate changes and finds significant results for only one city.