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Schools and Location: Tiebout, Alonso, and Government Policy

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Author Info
Eric A. Hanushek
Kuzey Yilmaz

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Abstract

An important element in considering school finance policies is that households are not passive. Instead they respond to policies with a combination of modified residential choice and political choice of tax levels. The highly stylized decision models of most existing analyses, however, lead to conerns about the policy evaluations. In our general equilibrium model of residential location and community choice, households base optimizing decisions on commuting costs, school quality, and land rents. With both centralized and decentralized employment, the resulting equilibrium has heterogeneous communities in terms of income and tastes for schools. This model is used to analyze a series of conventional policy experiments, including school district consolidation, district power utilization, and different equalization devices. The important conclusion is that welfare falls for all families with the restrictions in choice that are implied by these approaches.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12960.

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Date of creation: Mar 2007
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Handle: RePEc:nbr:nberwo:12960

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Find related papers by JEL classification:
H4 - Public Economics - - Publicly Provided Goods
I2 - Health, Education, and Welfare - - Education
R1 - Urban, Rural, and Regional Economics - - General Regional Economics
R51 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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  13. Epple, Dennis & Platt, Glenn J., 1998. "Equilibrium and Local Redistribution in an Urban Economy when Households Differ in both Preferences and Incomes," Journal of Urban Economics, Elsevier, vol. 43(1), pages 23-51, January. [Downloadable!] (restricted)
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  15. Epple, Dennis & Filimon, Radu & Romer, Thomas, 1984. "Equilibrium among local jurisdictions: toward an integrated treatment of voting and residential choice," Journal of Public Economics, Elsevier, vol. 24(3), pages 281-308, August. [Downloadable!] (restricted)
  16. Duncan Black & Vernon Henderson, 1997. "Urban Growth," NBER Working Papers 6008, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  18. Brasington, David M., 1999. "Joint provision of public goods: the consolidation of school districts," Journal of Public Economics, Elsevier, vol. 73(3), pages 373-393, September. [Downloadable!] (restricted)
  19. Eric A. Hanushek, 2003. "The Failure of Input-Based Schooling Policies," Economic Journal, Royal Economic Society, vol. 113(485), pages F64-F98, February. [Downloadable!] (restricted)
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  20. Hanushek, Eric & Yilmaz, Kuzey, 2007. "The complementarity of Tiebout and Alonso," Journal of Housing Economics, Elsevier, vol. 16(2), pages 243-261, June. [Downloadable!] (restricted)
  21. Ross, Stephen & Yinger, John, 1995. "Comparative static analysis of open urban models with a full labor market and suburban employment," Regional Science and Urban Economics, Elsevier, vol. 25(5), pages 575-605, October. [Downloadable!] (restricted)
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  23. Epple, Dennis & Nechyba, Thomas, 2004. "Fiscal decentralization," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 55, pages 2423-2480 Elsevier. [Downloadable!] (restricted)
  24. White, Michelle J., 1976. "Firm suburbanization and urban subcenters," Journal of Urban Economics, Elsevier, vol. 3(4), pages 323-343, October. [Downloadable!] (restricted)
  25. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March. [Downloadable!] (restricted)
  26. Dennis Epple & Richard Romano, 2000. "Neighborhood Schools, Choice, and the Distribution of Educational Benefits," NBER Working Papers 7850, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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