Essays on Redistribution and Local Public Expenditures
This thesis consists of a summary and four papers. The first two papers are theoretical contributions within the area of optimal taxation and public expenditures under asymmetric information between the government and the private sector, and the last two are empirical contributions to the literature on local public expenditures. Paper [I] concerns the optimal use of publicly provided private goods in an economy with equilibrium unemployment. The paper points out that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which motivates adjustments in the public provision of private goods. It also addresses employment related motives behind publicly provided private goods. Paper [II] addresses optimal income and commodity taxation in a dynamic economy, where used durable goods are subject to second-hand trade. In our framework, the government is unable to directly control second-hand transactions via commodity taxation. We show how the appearance of a second-hand market affects the use of commodity taxation on the new durable goods as well as the use of income taxation. Paper [III] relates the existence and size of the flypaper effect to observable municipal characteristics. The analysis is based on a political economy model, which implies that the effect of a change in the tax base on the majority voter's tax share will be crucial for finding a flypaper effect. The empirical part is based on Swedish data on municipal expenditures and revenues for the period 1996-2004. The results show that the size of the flypaper effect varies among municipalities depending on the relative composition of grant and tax base. In Paper [IV], the composition of municipal expenditures in Sweden is analyzed by estimating a demand system for local public services, in which tax revenue collection is treated as endogenous. The estimation is based on the QAIDS specification and uses panel data for the period 1998-2005 and for six local public services. The results show that the point estimates of the income elasticities are positive (with one exception), whereas the point estimates of the own-price elasticities are negative and less than one.
|Date of creation:||10 Mar 2008|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden|
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- Aronsson, Thomas & Palme, Mårten, 1994.
"A Decade of Tax and Benefit Reforms in Sweden - Effects on Labour Supply, Welfare and Inequality,"
SSE/EFI Working Paper Series in Economics and Finance
18, Stockholm School of Economics.
- Aronsson, Thomas & Palme, Marten, 1998. "A Decade of Tax and Benefit Reforms in Sweden: Effects on Labour Supply, Welfare and Inequality," Economica, London School of Economics and Political Science, vol. 65(257), pages 39-67, February.
- Aronsson,T. & Palme,M., 1994. "A Decade of Tax and Benefit Reforms in Sweden -Effects on Labour Supply, Welfare and Inequality," Papers 3, Uppsala - Working Paper Series.
- Aronsson, Thomas & Lundberg, Johan & Wikstrom, Magnus, 2000. "The impact of regional public expenditures on the local decision to spend," Regional Science and Urban Economics, Elsevier, vol. 30(2), pages 185-202, March.
- Aronsson, Thomas & Wikstrom, Magnus, 1996. "Local public expenditure in Sweden a model where the median voter is not necessarily decisive," European Economic Review, Elsevier, vol. 40(9), pages 1705-1716, December.
- Borge, Lars-Erik & Rattso, Jorn, 1995. "Demographic shift, relative costs and the allocation of local public consumption in Norway," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 705-726, December.
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- Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002.
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- Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002. "Instrumental variables and GMM: Estimation and testing," Boston College Working Papers in Economics 545, Boston College Department of Economics, revised 14 Feb 2003.
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- Giancarlo Moschini, 1995.
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- Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
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- James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
- Aaberge, Rolf & Langorgen, Audun, 2003. "Fiscal and Spending Behavior of Local Governments: Identification of Price Effects When Prices Are Not Observed," Public Choice, Springer, vol. 117(1-2), pages 125-61, October.
- Feldstein, Martin S, 1975. "Wealth Neutrality and Local Choice in Public Education," American Economic Review, American Economic Association, vol. 65(1), pages 75-89, March.
- James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
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