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Local Fiscal Policies and Urban Wage Structures

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Abstract

It has long been recognized that average wages vary strikingly across regions and urban areas, in part due to differences in local amenities and fiscal policies. However, analogous differences in wage dispersion remain relatively unexplored. We develop a model suggesting that, after accounting for individual characteristics, wage dispersion across income groups should reflect differences in the relative valuation of local amenities and fiscal policies. We empirically investigate whether there is a link between local taxes and expenditures and the degree of dispersion in the wage structure, and find evidence that such a relationship exists.

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  • Patricia Beeson & Tara Watson & Lara Shore-Sheppard, 2010. "Local Fiscal Policies and Urban Wage Structures," Department of Economics Working Papers 2010-05, Department of Economics, Williams College.
    • Handle: RePEc:wil:wileco:2010-05
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    Cited by:

    1. Galor, Oded & Ashraf, Quamrul, 2007. "Cultural Assimilation, Cultural Diffusion and the Origin of the Wealth of Nations," CEPR Discussion Papers 6444, C.E.P.R. Discussion Papers.
    2. Spolaore, Enrico & Wacziarg, Romain, 2014. "Long-Term Barriers to Economic Development," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 3, pages 121-176, Elsevier.
    3. Amitrajeet A. Batabyal & Peter Nijkamp, 2020. "Workplace choice, commuting costs, and wage taxation in urban and adjacent rural regions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(3), pages 775-786, December.
    4. Mark Dincecco & Mauricio Prado, 2012. "Warfare, fiscal capacity, and performance," Journal of Economic Growth, Springer, vol. 17(3), pages 171-203, September.
    5. Quamrul Ashraf & Oded Galor, 2011. "Dynamics and Stagnation in the Malthusian Epoch," American Economic Review, American Economic Association, vol. 101(5), pages 2003-2041, August.
    6. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2016. "Birthplace diversity and economic prosperity," Journal of Economic Growth, Springer, vol. 21(2), pages 101-138, June.
    7. Fourie, Johan & Santana-Gallego, María, 2013. "Ethnic reunion and cultural affinity," Tourism Management, Elsevier, vol. 36(C), pages 411-420.
    8. Sara LaLumia & James Sallee, 2013. "The value of honesty: empirical estimates from the case of the missing children," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(2), pages 192-224, April.
    9. Doepke, Matthias & Zilibotti, Fabrizio, 2014. "Culture, Entrepreneurship, and Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 0, pages 1-48, Elsevier.
    10. Margherita Bottero & Björn Wallace, 2013. "Is There a Long-Term Effect of Africa's Slave Trades?," Quaderni di storia economica (Economic History Working Papers) 30, Bank of Italy, Economic Research and International Relations Area.
    11. Max Nathan, 2013. "Top Team Demographics, Innovation and Business Performance: Findings from English Firms and Cities 2008-9," SERC Discussion Papers 0129, Centre for Economic Performance, LSE.
    12. Ömer Özak, 2012. "Distance to the Technological Frontier and Economic Development," Departmental Working Papers 1201, Southern Methodist University, Department of Economics.
    13. Anthony M. Yezer & Daniel A. Broxterman, 2014. "Why Does Skill Intensity Vary Across Cities? Housing Cost and True Human Capital," Working Papers 2014-15, The George Washington University, Institute for International Economic Policy.
    14. Algan, Yann & Cahuc, Pierre, 2014. "Trust, Growth, and Well-Being: New Evidence and Policy Implications," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 2, pages 49-120, Elsevier.
    15. Broxterman, Daniel A. & Yezer, Anthony M., 2015. "Why does skill intensity vary across cities? The role of housing cost," Regional Science and Urban Economics, Elsevier, vol. 55(C), pages 14-27.
    16. Alberto Bisin & Thierry Verdier, 2010. "The Economics of Cultural Transmission and Socialization," Post-Print halshs-00754788, HAL.
    17. Galor, Oded & Ashraf, Quamrul, 2008. "Dynamics and Stagnation in the Malthusian Epoch: Theory and Evidence," CEPR Discussion Papers 7057, C.E.P.R. Discussion Papers.
    18. Ortega, Francesc & Peri, Giovanni, 2013. "Migration, Trade and Income," IZA Discussion Papers 7325, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    inequality; wage distributions; local expenditures; local taxes;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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