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Government, Effectiveness, Performance and Local Property Values


  • Deller, Steven

    (U of Wisconsin)

  • Maher, Craig

    (U of Wisconsin, Oshkosh)


We offer a practical test of local government effectiveness in the provision of public services. Building on the work of Brueckner (1979, 1982, 1983) and Henderson (1990, 1995) we offer a property value maximization model where levels of local public services are capitalized into property values. Using data for Wisconsin municipalities we demonstrate that service expenditure levels, and corresponding taxation levels, should be increased. In other words, the property value maximization test suggests that local public services in Wisconsin are consistently under-provided. By monitoring local property values officials can objectively determine if public services are being provided in an optimal manner.

Suggested Citation

  • Deller, Steven & Maher, Craig, 2005. "Government, Effectiveness, Performance and Local Property Values," Staff Paper Series 482, University of Wisconsin, Agricultural and Applied Economics.
  • Handle: RePEc:ecl:wisagr:482

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    References listed on IDEAS

    1. Brueckner, Jan K., 1982. "A test for allocative efficiency in the local public sector," Journal of Public Economics, Elsevier, vol. 19(3), pages 311-331, December.
    2. Brueckner, Jan K., 1979. "Property values, local public expenditure and economic efficiency," Journal of Public Economics, Elsevier, vol. 11(2), pages 223-245, March.
    3. Paul W. Rhode & Koleman S. Strumpf, 2003. "Assessing the Importance of Tiebout Sorting: Local Heterogeneity from 1850 to 1990," American Economic Review, American Economic Association, vol. 93(5), pages 1648-1677, December.
    4. Daniel B. Kohlhepp & Charles A. Ingene, 1979. "The Effect of Municipal Services and Local Taxes on Housing Values," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 7(3), pages 318-343.
    5. Bates, Laurie J. & Santerre, Rexford E., 2003. "The impact of a state mandated expenditure floor on aggregate property values," Journal of Urban Economics, Elsevier, vol. 53(3), pages 531-540, May.
    6. Brueckner, Jan K. & Joo, Man-Soo, 1991. "Voting with capitalization," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 453-467, November.
    7. Keith Dowding & Peter John & Stephen Biggs, 1994. "Tiebout : A Survey of the Empirical Literature," Urban Studies, Urban Studies Journal Limited, vol. 31(4-5), pages 767-797, May.
    8. Deller, Steven C., 1990. "An application of a test for allocative efficiency in the local public sector," Regional Science and Urban Economics, Elsevier, vol. 20(3), pages 395-406, November.
    9. Wildasin, David E., 1979. "Local public goods, property values, and local public choice," Journal of Urban Economics, Elsevier, vol. 6(4), pages 521-534, October.
    10. Brueckner, Jan K., 1983. "Property value maximization and public sector efficiency," Journal of Urban Economics, Elsevier, vol. 14(1), pages 1-15, July.
    11. Henderson, J Vernon, 1980. "Community Development: The Effects of Growth and Uncertainty," American Economic Review, American Economic Association, vol. 70(5), pages 894-910, December.
    12. Henderson, J Vernon, 1985. "The Tiebout Model: Bring Back the Entrepreneurs," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 248-264, April.
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