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Trade Shocks and the Provision of Local Public Goods

Author

Listed:
  • Leo Feler
  • Mine Z. Senses

Abstract

We analyze the impact of trade-induced income shocks on the size of local government and the provision of public services. Areas in the United States with declining labor demand and incomes due to increasing import competition from China experience relative declines in housing prices and business activity. Since local governments are disproportionately funded through property and sales taxation, declining property values and a decrease in economic activity translate into less revenue, which constrains the ability of local governments to provide public services. State and federal governments have limited ability to smooth local shocks, and the impact on the provision of public services is compounded when local income shocks are highly correlated with shocks in the rest of the state. The outcome is a relative decline not only in incomes but also in the quality of public services and amenities in trade exposed localities.

Suggested Citation

  • Leo Feler & Mine Z. Senses, 2017. "Trade Shocks and the Provision of Local Public Goods," American Economic Journal: Economic Policy, American Economic Association, vol. 9(4), pages 101-143, November.
  • Handle: RePEc:aea:aejpol:v:9:y:2017:i:4:p:101-43
    Note: DOI: 10.1257/pol.20150578
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    Cited by:

    1. Gaurav Khanna & Carlos Medina & Anant Nyshadham & Jorge Tamayo, 2018. "Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia," Borradores de Economia 1054, Banco de la Republica de Colombia.
    2. repec:boi:isrerv:v:16:y:2019:i:2:p:141-147 is not listed on IDEAS
    3. Teresa C. Fort & Justin R. Pierce & Peter K. Schott, 2018. "New Perspectives on the Decline of US Manufacturing Employment," Journal of Economic Perspectives, American Economic Association, vol. 32(2), pages 47-72, Spring.
    4. Costa, Francisco Junqueira Moreira da & Marcantonio Junior, Angelo & Castro, Rudi Rocha de, 2018. "Stop suffering! Economic downturns and pentecostal upsurge," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 804, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    5. Colantone, Italo & Crinò, Rosario & Ogliari, Laura, 2019. "Globalization and mental distress," Journal of International Economics, Elsevier, vol. 119(C), pages 181-207.
    6. Justin R. Pierce & Peter K. Schott, 2020. "Trade Liberalization and Mortality: Evidence from US Counties," American Economic Review: Insights, American Economic Association, vol. 2(1), pages 47-64, March.
    7. Hale Utar, 2018. "Firms and Labor in Times of Violence: Evidence from the Mexican Drug War," CESifo Working Paper Series 7345, CESifo.
    8. Arenas, Andreu & Malgouyres, Clément, 2018. "Countercyclical school attainment and intergenerational mobility," Labour Economics, Elsevier, vol. 53(C), pages 97-111.
    9. Lyon, Spencer G. & Waugh, Michael E., 2018. "Redistributing the gains from trade through progressive taxation," Journal of International Economics, Elsevier, vol. 115(C), pages 185-202.
    10. Katheryn N. Russ, 2018. "Review Of “Globalization And Inequality” By Elhanan Helpman," Israel Economic Review, Bank of Israel, vol. 16(2), pages 141-147.
    11. Dix-Carneiro, Rafael & Kovak, Brian K., 2019. "Margins of labor market adjustment to trade," Journal of International Economics, Elsevier, vol. 117(C), pages 125-142.
    12. Jeffry Frieden, 2018. "The politics of the globalization backlash: Sources and implications," GRU Working Paper Series GRU_2018_001, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    13. Che, Yi & Xu, Xun & Zhang, Yan, 2018. "Chinese import competition, crime, and government transfers in US," Journal of Comparative Economics, Elsevier, vol. 46(2), pages 544-567.
    14. Matthew Lang & T. Clay McManus & Georg Schaur, 2019. "The effects of import competition on health in the local economy," Health Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 44-56, January.
    15. Brian Beach & John Lopresti, 2019. "Losing By Less? Import Competition, Unemployment Insurance Generosity, And Crime," Economic Inquiry, Western Economic Association International, vol. 57(2), pages 1163-1181, April.
    16. Hillberry, Russell & Cheng, Yichuan (Stanley), 2018. "U.S. county-level impacts of growing agricultural imports from China," 2018 Annual Meeting, August 5-7, Washington, D.C. 274283, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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