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Local public goods and the demand for high-income municipalities

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  • Boustan, Leah Platt

Abstract

Affluent towns often deliver high-quality public services to their residents. I estimate the willingness to pay to live in a high-income suburb, above and beyond the demand of wealthy neighbors, by measuring changes in housing prices across city–suburban borders as the income disparity between the two municipalities changes over time. I find that a $10,000 increase in town-level median income is associated with a seven percent increase in housing values at the border. The estimated demand for high-income municipalities is primarily driven by school quality and lower property tax rates.

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  • Boustan, Leah Platt, 2013. "Local public goods and the demand for high-income municipalities," Journal of Urban Economics, Elsevier, vol. 76(C), pages 71-82.
    • Handle: RePEc:eee:juecon:v:76:y:2013:i:c:p:71-82
    DOI: 10.1016/j.jue.2013.02.003
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    9. Allison Shertzer & Randall P. Walsh, 2019. "Racial Sorting and the Emergence of Segregation in American Cities," The Review of Economics and Statistics, MIT Press, vol. 101(3), pages 415-427, July.
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    11. Andersson, Henrik & Berg, Heléne & Dahlberg, Matz, 2021. "Migrating natives and foreign immigration: Is there a preference for ethnic residential homogeneity?," Journal of Urban Economics, Elsevier, vol. 121(C).
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    14. Basu, Arnab K. & Chau, Nancy H. & Lin, Gary C., 2022. "Migration Gravity, Networks, and Unemployment," IZA Discussion Papers 15808, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Suburbanization; Housing prices; Willingness to pay; Local public goods;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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