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Local public goods, debt and migration

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  • Schultz, Christian
  • Sjostrom, Tomas

Abstract

Migration raises a potential free rider problem for th eprovision of durable local goods if the late-comers can enjoy the public good without paying for it. Allowing communities to finance public goods by debt mitigates this problem, since future immigrants have to share the burden of the debt. However, in equilibrium there will be over-accumulation of local debt. There may be more or less public good than in first best, but conditional on the inefficiently high level of debt there will be too few public goods. A competitive market for land reduces but does not in general eliminate the inefficiencies.
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  • Schultz, Christian & Sjostrom, Tomas, 2001. "Local public goods, debt and migration," Journal of Public Economics, Elsevier, vol. 80(2), pages 313-337, May.
    • Handle: RePEc:eee:pubeco:v:80:y:2001:i:2:p:313-337
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing

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