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Tiebout? Or Not Tiebout? The Market Metaphor and America's Devolution Debate

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  • John D. Donahue
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    Abstract

    The market metaphor of intergovernmental choice as a spur to efficiency (formalized by Charles M. Tiebout) is often invoked to support the shift away from Washington and toward the states. But the model translates badly to governments; governmental entry and exit is costly. Public-sector co11usion often serves citizens' interests. Heterogeneous mobility distorts the signals sent by interstate migration. And while Tiebout (and followers) condition efficiency predictions on optimal distribution, the U.S. devolution movement coincides with rising inequality and has gone furthest where distribution matters most. The metaphor is misapplied. Devolution will likely do more to enfeeble government than to improve it.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.11.4.73
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    Bibliographic Info

    Article provided by American Economic Association in its journal Journal of Economic Perspectives.

    Volume (Year): 11 (1997)
    Issue (Month): 4 (Fall)
    Pages: 73-81

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    Handle: RePEc:aea:jecper:v:11:y:1997:i:4:p:73-81

    Note: DOI: 10.1257/jep.11.4.73
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    1. Cebula, Richard J, 1990. " A Brief Empirical Note on the Tiebout Hypothesis and State Income Tax Policies," Public Choice, Springer, vol. 67(1), pages 87-89, October.
    2. Edward M. Gramlich & Deborah S. Laren, 1984. "Migration and Income Redistribution Responsibilities," Journal of Human Resources, University of Wisconsin Press, vol. 19(4), pages 489-511.
    3. P. B. Levine & D. J. Zimmerman, . "An empirical analysis of the welfare magnet debate using the NLSY," Institute for Research on Poverty Discussion Papers 1098-96, University of Wisconsin Institute for Research on Poverty.
    4. Carpenter, Vivian L., 1991. "The influence of political competition on the decision to adopt GAAP," Journal of Accounting and Public Policy, Elsevier, vol. 10(2), pages 105-134.
    5. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
    6. Brown, Charles C. & Oates, Wallace E., 1987. "Assistance to the poor in a federal system," Journal of Public Economics, Elsevier, vol. 32(3), pages 307-330, April.
    7. Philip J. Grossman, 1990. "Fiscal Competition among States in Australia: The Demise of Death Duties," Development Research Unit Working Paper Series archive-15, Monash University, Department of Economics.
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    Cited by:
    1. Bilin Neyapti, 2003. "Fiscal Decentralisation and Deficits: International Evidence," Working Papers 2003/2, Turkish Economic Association.
    2. Eduardo Wiesner Durán, 2003. "La descentralización, la estabilidad macroeconómica y la integración económica regional: Enlaces de política y mecanismos de transmisión," IDB Publications 4478, Inter-American Development Bank.
    3. Kraybill, David S. & Lobao, Linda, 2001. "The Emerging Roles of County Governments in Rural America: Findings from a Recent National Survey," 2001 Annual meeting, August 5-8, Chicago, IL 20697, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. William R. Eadington, 1999. "The Economics of Casino Gambling," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 173-192, Summer.

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