Local Public Good Provision: Voting, Peer Effects, and Mobility
AbstractFew empirical strategies have been developed that investigate public provision under majority rule while taking explicit account of the constraints implied by mobility of households. The goal of this paper is to improve our understanding of voting in local communities when neighborhood quality depends on peer or neighborhood effects. We develop a new empirical approach which allows us to impose all restrictions that arise from locational equilibrium models with myopic voting simultaneously on the data generating process. We can then analyze how close myopic models come in replicating the main regularities about expenditures, taxes, sorting by income and housing observed in the data. We find that a myopic voting model that incorporates peer effects fits all dimensions of the data reasonably well.
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Date of creation: Oct 2005
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Find related papers by JEL classification:
- H4 - Public Economics - - Publicly Provided Goods
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- H1 - Public Economics - - Structure and Scope of Government
- R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-05 (All new papers)
- NEP-CDM-2005-11-05 (Collective Decision-Making)
- NEP-GEO-2005-11-05 (Economic Geography)
- NEP-PBE-2005-11-05 (Public Economics)
- NEP-SOC-2005-11-05 (Social Norms & Social Capital)
- NEP-URE-2005-11-05 (Urban & Real Estate Economics)
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