The Effect of Rising Income Inequality on Taxation and Public Expenditures: Evidence from U.S. Municipalities and School Districts, 1970–2000

Boustan, Leah Platt; Ferreira, Fernando; Winkler, Hernán; Zolt, Eric M.

doi:10.1162/rest_a_00332

Cited by 146 publications

(88 citation statements)

References 39 publications

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“…Relatedly, Boustan et al (2013), find that income inequality may be beneficial to the funding of local public goods, with high-income individuals disproportionately paying for and subsidizing services for the rest of the local population.…”

Section: Local Outcomes and Public Financesmentioning

confidence: 99%

Trade Shocks and the Provision of Local Public Goods

Feler¹,

Senses

2017

American Economic Journal: Economic Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Trade Shocks and the Provision of Local Public GoodsIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.IZA Discussion Paper No. 10231 September 2016 ABSTRACT Trade Shocks and the Provision of Local Public Goods *We analyze the impact of trade-induced income shocks on the size of local government, and the provision of public services. Areas in the US with declining labor demand and incomes due to increasing import competition from China experience relative declines in housing prices and business activity. Since local governments are disproportionately funded through property and sales taxation, declining property values and a decrease in economic activity translate into less revenue, which constrains the ability of local governments to provide public services. State and federal governments have limited ability to smooth local shocks, and the impact on the provision of public services is compounded when local income shocks are highly correlated with shocks in the rest of the state. The outcome is greater inequality not only in incomes but also in the quality of public services and amenities across US jurisdictions.JEL Classification: F14, F16, H41, H70, R12, R23

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Section: Local Outcomes and Public Financesmentioning

confidence: 99%

Trade Shocks and the Provision of Local Public Goods

Feler¹,

Senses

2017

American Economic Journal: Economic Policy

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“…Through GMM estimation of a spatial equilibrium model, Diamond (2013) uses the identifying variation available from Bartik instruments to recover how local labor demand shocks lead to knock-on shifts in local skill composition and skill-specific amenities. Boustan et al (2013) use Bartik instruments to help demonstrate that jurisdictions with greater increases in income inequality collected more local government revenues and had higher expenditures. Luttmer (2005) uses Bartik instruments in a reduced form specification to control for changes in average area incomes in showing that people falling behind their neighbors are less happy, even if everyone's incomes are increasing.…”

Section: Examples Of IV In Urban Economicsmentioning

confidence: 99%

Causal Inference in Urban and Regional Economics

Baum-Snow

Ferreira

2014

Self Cite

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Recovery of causal relationships in data is an essential part of scholarly inquiry in the social sciences. This chapter discusses strategies that have been successfully used in urban and regional economics for recovering such causal relationships. Essential to any successful empirical inquiry is careful consideration of the sources of variation in the data that identify parameters of interest. Interpretation of such parameters should take into account the potential for their heterogeneity as a function of both observables and unobservables. AbstractRecovery of causal relationships in data is an essential part of scholarly inquiry in the social sciences. This chapter discusses strategies that have been successfully used in urban and regional economics for recovering such causal relationships. Essential to any successful empirical inquiry is careful consideration of the sources of variation in the data that identify parameters of interest. Interpretation of such parameters should take into account the potential for their heterogeneity as a function of both observables and unobservables.

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“…First, papers have attempted to determine the effect of the income distribution, in particular, income inequality, on the support for public spending on private goods (e.g., Corcoran and Evans, 2010;Boustan et al, 2013). Second, papers have empirically examined the nature of the political economy equilibrium, that is, whether the median voter is decisive or whether there is an 'ends-against-the middle' outcome, for different forms of public spending.…”

Section: Introductionmentioning

confidence: 99%

Support for public provision of a private good with top-up and opt-out: A controlled laboratory experiment

Buckley

Cuff

Hurley

et al. 2015

Journal of Economic Behavior & Organization

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a b s t r a c tThis paper presents the results of a revealed-choice experiment testing the theoretical predictions of political economy models regarding public support for a publicly provided private good financed with proportional income taxes when individuals can purchase the good privately and either continue to consume public provision ('top-up') or forego public provision ('opt-out'), but in each case continue to pay income taxes. Our laboratory results confirm behavior is consistent with the predicted majority-preferred tax rate under mixed financing with top-up, but we identify preferences for significantly higher rates of public provision than predicted under mixed financing with opt-out. Using non parametric regression analysis, we explore the relationship between individuals' top-up and opt-out decisions and both their income levels and the implemented tax rates.

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The Effect of Rising Income Inequality on Taxation and Public Expenditures: Evidence from U.S. Municipalities and School Districts, 1970–2000

Cited by 146 publications

References 39 publications

Trade Shocks and the Provision of Local Public Goods

Trade Shocks and the Provision of Local Public Goods

Causal Inference in Urban and Regional Economics

Support for public provision of a private good with top-up and opt-out: A controlled laboratory experiment

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