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The Distribution of Public Services: An Exploration of Local Governmental Preferences

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  • Behrman, Jere R
  • Craig, Steven G

Abstract

A local governmental welfare function is specified to explore two of its central characteristics: the equity-productivity trade-off and differential weights across neighborhoods. The constrained maximization model is estimated using service outcomes (safety) in the welfare function, as opposed to publicly provided inputs (police), over neighborhoods. The equity-productivity trade-off is found to be considerable, and not all neighborhoods are weighted equally. The results show that inequality aversion and unequal concern by local government over service outcomes must be addressed explicitly to understand the observed distribution of publicly provided inputs, with important implications for standard analysis of local governmental behavior. Copyright 1987 by American Economic Association.

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  • Behrman, Jere R & Craig, Steven G, 1987. "The Distribution of Public Services: An Exploration of Local Governmental Preferences," American Economic Review, American Economic Association, vol. 77(1), pages 37-49, March.
  • Handle: RePEc:aea:aecrev:v:77:y:1987:i:1:p:37-49
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    References listed on IDEAS

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    1. Prescott, Edward C., 1986. "Theory ahead of business-cycle measurement," Carnegie-Rochester Conference Series on Public Policy, Elsevier, pages 11-44.
    2. Matthew D. Shapiro, 1986. "Investment, Output, and the Cost of Capital," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(1), pages 111-164.
    3. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    4. Hendrik S. Houthhakker, 1979. "Growth and Inflation: Analysis by Industry," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 241-257.
    5. Long, John B, Jr & Plosser, Charles I, 1983. "Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 39-69, February.
    6. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    7. Lawrence H. Summers, 1986. "Some skeptical observations on real business cycle theory," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 23-27.
    8. Fischer, Stanley, 1977. "Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 191-205, February.
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