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City competition for the creative class

Author

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  • Thiess Buettner

    () (University of Erlangen-Nuremberg)

  • Eckhard Janeba

    () (University of Mannheim)

Abstract

Abstract This paper explores the conditions under which decentralization and fiscal competition lead to a policy of providing public amenities in order to attract highly productive labor. It provides a theoretical analysis which shows that the incentive to provide such amenities is particularly strong, if institutional restrictions prevent local governments from adjusting their tax structure. The empirical analysis considers the case of Germany, where public subsidies to local theaters are shown to exert a compensating earnings differential for highly educated labor. Taking account of the institutional setting, our empirical results suggest that local jurisdictions in Germany are subject to a substantial fiscal incentive to subsidize cultural activities.

Suggested Citation

  • Thiess Buettner & Eckhard Janeba, 2016. "City competition for the creative class," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 40(4), pages 413-451, November.
  • Handle: RePEc:kap:jculte:v:40:y:2016:i:4:d:10.1007_s10824-015-9258-1
    DOI: 10.1007/s10824-015-9258-1
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    Citations

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    Cited by:

    1. Batabyal, Amitrajeet & Yoo, Seung Jick, 2019. "Using a Local Public Good to Attract Representative Creative Class Members: The Inefficient Equilibrium Case," MPRA Paper 97841, University Library of Munich, Germany, revised 11 Dec 2019.
    2. Oliver Falck & Michael Fritsch & Stephan Heblich & Anne Otto, 2015. "Music in the Air: Estimating the Social Return to Cultural Amenities," CESifo Working Paper Series 5183, CESifo Group Munich.
    3. Amitrajeet A. Batabyal & Peter Nijkamp, 2019. "Creative capital, information and communication technologies, and economic growth in smart cities," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 28(2), pages 142-155, February.
    4. Batabyal, Amitrajeet A. & Yoo, Seung Jick, 2018. "Schumpeterian creative class competition, innovation policy, and regional economic growth," International Review of Economics & Finance, Elsevier, vol. 55(C), pages 86-97.
    5. Amitrajeet A. Batabyal & Karima Kourtit & Peter Nijkamp, 2019. "Using local public goods to attract and retain the creative class: A tale of two cities," Regional Science Policy & Practice, Wiley Blackwell, vol. 11(3), pages 571-581, August.
    6. Batabyal, Amitrajeet, 2018. "Creative Class Competition and Innovation in the Absence of Patent Protection," MPRA Paper 89604, University Library of Munich, Germany, revised 17 Apr 2018.
    7. Niklas Potrafke & Felix Roesel, 2019. "The urban-rural gap in health care infrastructure - does government ideology matter?," CESifo Working Paper Series 7647, CESifo Group Munich.
    8. Amitrajeet A. BATABYAL & Seung Jick YOO, 2019. "A Stochastic Model Of Competition Between Two Cities For Members Of The Creative Class," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(3), pages 37-42, December.
    9. Hyun-kyung Lee & Hong-bae Kim, 2019. "Regional preferences for the living environment and mobility of researchers and general workers: the case of Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(1), pages 169-186, February.
    10. Oliver Falck & Michael Fritsch & Stephan Heblich & Anne Otto, 2018. "Music in the air: estimating the social return to cultural amenities," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(3), pages 365-391, August.
    11. Batabyal, Amitrajeet & Yoo, Seung Jick, 2019. "Using Utilitarian and Rawlsian Policies to Attract the Creative Class: A Tale of Two Cities," MPRA Paper 91827, University Library of Munich, Germany.
    12. Batabyal, Amitrajeet A. & Beladi, Hamid, 2018. "Artists, engineers, and aspects of economic growth in a creative region," Economic Modelling, Elsevier, vol. 71(C), pages 214-219.
    13. Norbert Hiller & Oliver Lerbs, 2015. "The capitalization of non-market attributes into regional housing rents and wages: evidence on German functional labor market areas," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 35(1), pages 49-72, February.

    More about this item

    Keywords

    Fiscal competition; Creative class; Cultural amenities; Theater subsidies; Tax autonomy; Capitalization; Individual earnings;

    JEL classification:

    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • Z18 - Other Special Topics - - Cultural Economics - - - Public Policy
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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