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Property Taxation as a Determinant of School District Efficiency

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  • Marte Rønning

    ()
    (Centre for Economic Research and Department of Economics, Norwegian University of Science and Technology)

  • Jon Hernes Fiva

    ()
    (Centre for Economic Research and Department of Economics, Norwegian University of Science and Technology)

Abstract

Recent theoretical contributions have emphasized the favorable incentive effects of property taxation. The object of this paper is to confront these theories with Norwegian data on student performance. The institutional setting in Norway is well suited to analyzing the effects of property taxation because we can compare school districts with and without property taxation. In addition, we focus on an alternative incentive mechanism - competition between school districts. The empirical results indicate that students in school districts that levy residential property taxes perform better at the national examination than students in comparable school districts. Strategic interaction in school quality is present, but the magnitude of the interaction effect is modest.

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Bibliographic Info

Paper provided by Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 5105.

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Length: 29 pages
Date of creation: 01 Aug 2004
Date of revision: 14 Jul 2005
Handle: RePEc:nst:samfok:5105

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Keywords: Student achievement; efficiency; property taxation; competition; spatial auto-regressive model;

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References

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  1. SALMON, Pierre, 1987. "Decentralization as an incentive scheme," Institut des Mathématiques Economiques – Document de travail de l’I.M.E. (1974-1993) 98, Institut des Mathématiques Economiques. LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS, Université de Bourgogne.
  2. Brennan, Geoffrey & Buchanan, James M., 1978. "Tax instruments as constraints on the disposition of public revenues," Journal of Public Economics, Elsevier, vol. 9(3), pages 301-318, June.
  3. Roger H. Gordon & John D. Wilson, 2001. "Expenditure Competition," NBER Working Papers 8189, National Bureau of Economic Research, Inc.
  4. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
  5. Hanushek, Eric A., 2002. "Publicly provided education," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 30, pages 2045-2141 Elsevier.
  6. Edward L. Glaeser, 1995. "The Incentive Effects of Property Taxes on Local Governments," NBER Working Papers 4987, National Bureau of Economic Research, Inc.
  7. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
  8. Falch, Torberg & Rattso, Jorn, 1999. "Local public choice of school spending: disaggregating the demand function for educational services," Economics of Education Review, Elsevier, vol. 18(3), pages 361-373, June.
  9. Hoxby, Caroline M., 1999. "The productivity of schools and other local public goods producers," Journal of Public Economics, Elsevier, vol. 74(1), pages 1-30, October.
  10. Anselin, Luc & Bera, Anil K. & Florax, Raymond & Yoon, Mann J., 1996. "Simple diagnostic tests for spatial dependence," Regional Science and Urban Economics, Elsevier, vol. 26(1), pages 77-104, February.
  11. Borge, Lars-Erik & Rattso, J.Jorn, 2004. "Income distribution and tax structure: Empirical test of the Meltzer-Richard hypothesis," European Economic Review, Elsevier, vol. 48(4), pages 805-826, August.
  12. Lars-Erik Borge & Jørn Rattsø, 2006. "Property taxation as incentive for cost control:Empirical evidence for utility services in Norway," Working Paper Series 7606, Department of Economics, Norwegian University of Science and Technology.
  13. Blair, John P. & Staley, Sam, 1995. "Quality competition and public schools: Further evidence," Economics of Education Review, Elsevier, vol. 14(2), pages 193-198, June.
  14. Millimet, Daniel L. & Rangaprasad, Vasudha, 2007. "Strategic competition amongst public schools," Regional Science and Urban Economics, Elsevier, vol. 37(2), pages 199-219, March.
  15. Grosskopf, Shawna & Hayes, Kathy J. & Taylor, Lori L. & Weber, William L., 2001. "On the Determinants of School District Efficiency: Competition and Monitoring," Journal of Urban Economics, Elsevier, vol. 49(3), pages 453-478, May.
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Cited by:
  1. Jørn Rattsø & Jon Hernes Fiva, 2005. "Decentralization with Property Taxation to Improve Incentives: Evidence from Local Governments’ Discrete Choice," Working Paper Series 5305, Department of Economics, Norwegian University of Science and Technology, revised 02 Sep 2005.

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