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Local Public Good Provision: Voting, Peer Effects, and Mobility

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  • Stephen Calabrese
  • Dennis Epple
  • Thomas Romer
  • Holger Sieg

Abstract

Few empirical strategies have been developed that investigate public provision under majority rule while taking explicit account of the constraints implied by mobility of households. The goal of this paper is to improve our understanding of voting in local communities when neighborhood quality depends on peer or neighborhood effects. We develop a new empirical approach which allows us to impose all restrictions that arise from locational equilibrium models with myopic voting simultaneously on the data generating process. We can then analyze how close myopic models come in replicating the main regularities about expenditures, taxes, sorting by income and housing observed in the data. We find that a myopic voting model that incorporates peer effects fits all dimensions of the data reasonably well.

Suggested Citation

  • Stephen Calabrese & Dennis Epple & Thomas Romer & Holger Sieg, 2005. "Local Public Good Provision: Voting, Peer Effects, and Mobility," NBER Working Papers 11720, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11720
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    References listed on IDEAS

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    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H1 - Public Economics - - Structure and Scope of Government
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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