IDEAS home Printed from https://ideas.repec.org/p/fip/fedbcw/11-1.html
   My bibliography  Save this paper

Municipal aid evaluation and reform

Author

Listed:
  • Bo Zhao

Abstract

The distribution of unrestricted municipal aid has been a major policy concern in many states. Using Massachusetts as a case study, this paper examines the extent to which unrestricted municipal aid is responsive to the variation in the underlying fiscal health of municipalities. The paper uses a measure of ?municipal gap??based on local economic and social characteristics outside the direct control of local officials?to indicate the underlying fiscal health of cities and towns. The analysis finds large disparities in municipal gaps among Massachusetts cities and towns, and that those disparities have increased in recent years. However, unrestricted municipal aid has not been highly correlated with municipal gaps. This pattern is partly due to large ad hoc cuts in state aid over the past 20 years. This paper suggests that the state consider adopting a gap-based formula that provides more aid to communities facing larger municipal gaps. Policymakers should carefully readjust policy parameters in the formula over time to maintain the political feasibility of the approach. The gap-based framework and policy suggestions are potentially applicable to other states.

Suggested Citation

  • Bo Zhao, 2011. "Municipal aid evaluation and reform," New England Public Policy Center Working Paper 11-1, Federal Reserve Bank of Boston.
  • Handle: RePEc:fip:fedbcw:11-1
    as

    Download full text from publisher

    File URL: http://www.bostonfed.org/economic/neppc/wp/2011/neppcwp111.htm
    Download Restriction: no

    File URL: http://www.bostonfed.org/economic/neppc/wp/2011/neppcwp111.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ali, Agha Iqbal & Lerme, Catherine S. & Nakosteen, Robert A., 1993. "Assessment of intergovernmental revenue transfers," Socio-Economic Planning Sciences, Elsevier, vol. 27(2), pages 109-118, June.
    2. Hagerbaumer, James B, 1977. "The Gini Concentration Ratio and the Minor Concentration Ratio: A Two-Parameter Index of Inequality," The Review of Economics and Statistics, MIT Press, vol. 59(3), pages 377-379, August.
    3. Bo Zhao & Katharine Bradbury, 2009. "Designing state aid formulas," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(2), pages 278-295.
    4. Yinger, John, 1986. "On fiscal disparities across cities," Journal of Urban Economics, Elsevier, vol. 19(3), pages 316-337, May.
    5. John Riew, 1970. "State Aids for Public Schools and Metropolitan Finance," Land Economics, University of Wisconsin Press, vol. 46(3), pages 297-304.
    6. Roy Bahl & Jorge Martinez-Vazquez & David L. Sjoquist, 1992. "Central City-Suburban Fiscal Disparities," Public Finance Review, , vol. 20(4), pages 420-432, October.
    7. Graham Pyatt & Chau-nan Chen & John Fei, 1980. "The Distribution of Income by Factor Components," The Quarterly Journal of Economics, Oxford University Press, vol. 95(3), pages 451-473.
    8. Bradbury, Katharine & Zhao, Bo, 2009. "Measuring Non–School Fiscal Disparities Among Municipalities," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(1), pages 25-56, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bo Zhao, 2015. "From urban core to wealthy towns: nonschool fiscal disparities across Connecticut municipalities," Working Papers 15-14, Federal Reserve Bank of Boston.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marques Benton & Lynn E. Browne & Prabal Chakrabarti & DeAnna Green & Yolanda Kodrzycki & Ana Patricia Munoz & Richard Walker & Bo Zhao, 2010. "Does Springfield receive its fair share of municipal aid? : implications for aid formula reform in Massachusetts," Public and Community Affairs Discussion Papers 2010-2, Federal Reserve Bank of Boston.
    2. Jennifer Weiner & Bo Zhao, 2015. "Measuring municipal fiscal disparities in Connecticut," New England Public Policy Center Research Report 15-1, Federal Reserve Bank of Boston.
    3. Audun Langørgen, 2015. "A structural approach for analyzing fiscal equalization," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(3), pages 376-400, June.
    4. Estudillo, Jonna P. & Quisumbing, Agnes R. & Otsuka, Keijiro, 2001. "Income distribution in rice-growing villages during the post-Green Revolution periods: the Philippine case, 1985 and 1998," Agricultural Economics, Blackwell, vol. 25(1), pages 71-84, June.
    5. Jekaterina Navickė & Romas Lazutka, 2018. "Distributional Implications of the Economic Development in the Baltics: Reconciling Micro and Macro Perspectives," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 138(1), pages 187-206, July.
    6. Tassos Giannitsis & Stavros Zografakis, 2015. "Greece: Solidarity And Adjustment In Times Of Crisis," IMK Studies 38-2015, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    7. Taylor, J. Edward, 1992. "Remittances and inequality reconsidered: Direct, indirect, and intertemporal effects," Journal of Policy Modeling, Elsevier, vol. 14(2), pages 187-208, April.
    8. Mustafa Dinc & Kingsley E. Haynes, 1999. "Regional Efficiency in the Manufacturing Sector: Integrated Shift-Share and Data Envelopment Analysis," Economic Development Quarterly, , vol. 13(2), pages 183-199, May.
    9. Mishra, Ashok & El-Osta, Hisham & Gillespie, Jeffrey M., 2009. "Effect of agricultural policy on regional income inequality among farm households," Journal of Policy Modeling, Elsevier, vol. 31(3), pages 325-340, May.
    10. Nong ZHU, 2002. "L’impact des activités non-agricoles rurales sur le revenu des agriculteurs en Chine," Working Papers 200222, CERDI.
    11. Carole Bonnet & Dominique Meurs & Benoît Rapoport, 2018. "Gender inequalities in pensions: different components similar levels of dispersion," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(4), pages 527-552, December.
    12. Stéphane Mussard & Michel Terraza, 2009. "Décompositions des mesures d'inégalité : le cas des coefficients de Gini et d'entropie," Recherches économiques de Louvain, De Boeck Université, vol. 75(2), pages 151-181.
    13. Qiuqiong Huang & David Dawe & Scott Rozelle & Jikun Huang & Jinxia Wang, 2005. "Irrigation, poverty and inequality in rural China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(2), pages 159-175, June.
    14. von Witzke, Harald & Noleppa, Steffen, 2007. "Agricultural and Trade Policy Reform and Inequality: The Distributive Effects of Direct Payments to German Farmers under the EU's New Common Agricultural Policy," Working Paper Series 10289, Humboldt University Berlin, Department of Agricultural Economics.
    15. Andrey A. Pugachev, 2022. "Taxation-Based Indicators as a Measure of Income Inequality in Russian Regions," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 8(1), pages 40-53.
    16. Stéphane Mussard, 2006. "La décomposition des mesures d’inégalité en sources de revenu : l’indice de Gini et les généralisations," Cahiers de recherche 06-05, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    17. McBride, William D., 1997. "Change in U.S. Livestock Production, 1969-92," Agricultural Economic Reports 262047, United States Department of Agriculture, Economic Research Service.
    18. Milanovic, Branko, 1994. "The Gini-Type Functions: An Alternative Derivation," Bulletin of Economic Research, Wiley Blackwell, vol. 46(1), pages 81-90, January.
    19. Carlo Mazzaferro & Stefano Toso, 2009. "The Distribution Of Total Wealth In Italy: 1991–2002," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 779-802, September.
    20. Eric Amoo Bondzie & Gabriel Obed Fosu & Ernest Obu-Cann, 2014. "Poverty and Regional Inequality in Ghana; A Review," Journal of Social Economics, Research Academy of Social Sciences, vol. 1(1), pages 32-36.

    More about this item

    Keywords

    Municipal finance - Massachusetts;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedbcw:11-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Spozio (email available below). General contact details of provider: https://edirc.repec.org/data/frbbous.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.