Income Heterogeneity and the Flypaper Effect
AbstractThe purpose of this paper is to analyze the determinants of the local public expenditures and, in particular, try to explain the so called ’flypaper effect’. The analysis uses a political economy model to relate the existence and size of the flypaper effect to observable municipal characteristics such as the average tax base, income dispersion andwhether or not a change in the average tax base affects the tax share of the majority voter. The empirical part of the study is based on Swedish data on municipal expenditures and revenues for the period 1996-2004. The results show that the size of the flypaper effect varies among municipalities depending on the relative composition of grant and tax base.
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Bibliographic InfoPaper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 718.
Length: 39 pages
Date of creation: 19 Oct 2007
Date of revision:
Contact details of provider:
Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
Web page: http://www.econ.umu.se/
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Income Dispersion; Local Public Expenditures; Intergovernmental Relations;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-27 (All new papers)
- NEP-PBE-2007-10-27 (Public Economics)
- NEP-POL-2007-10-27 (Positive Political Economics)
- NEP-URE-2007-10-27 (Urban & Real Estate Economics)
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- Witterblad, Mikael, 2008. "The Demand for Local Public Services in Sweden," UmeÃ¥ Economic Studies, UmeÃ¥ University, Department of Economics 730, Umeå University, Department of Economics.
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