The Productivity of Schools and Other Local Public Goods Providers
I construct an agency model of local public goods producers with special reference to public schools. The model assumes that households make Tiebout choices among jurisdictions, but it has more realistic assumptions about information and the cost of residential mobility. I examine producers' effort and rent under local property tax finance and centralized finance. I show that, if there are a sufficient number of jurisdictions to choose among, conventional local property tax finance substantially reduces the agency problem and associated loss of productivity. Specifically, I demonstrate that local property tax finance can attain about as much productivity as a social planner with centralized finance can, even if the social planner is armed with more information that a real social planner could plausibly have. The key insight is that decentralized Tiebout choices make some information the social planner would need verifiable and other information unnecessary.
|Date of creation:||Jan 1999|
|Date of revision:|
|Publication status:||published as Journal of Public Economics (1999).|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rauscher, Michael, 1998. "Leviathan and Competition among Jurisdictions: The Case of Benefit Taxation," Journal of Urban Economics, Elsevier, vol. 44(1), pages 59-67, July.
- Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
- Epple, Dennis & Filimon, Radu & Romer, Thomas, 1984. "Equilibrium among local jurisdictions: toward an integrated treatment of voting and residential choice," Journal of Public Economics, Elsevier, vol. 24(3), pages 281-308, August.
- Epple, Dennis & Zelenitz, Allan, 1981. "The Implications of Competition among Jurisdictions: Does Tiebout Need Politics?," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1197-1217, December.
- Caroline M. Hoxby, 2000.
"Does Competition among Public Schools Benefit Students and Taxpayers?,"
American Economic Review,
American Economic Association, vol. 90(5), pages 1209-1238, December.
- Caroline Minter Hoxby, 1994. "Does Competition Among Public Schools Benefit Students and Taxpayers?," NBER Working Papers 4979, National Bureau of Economic Research, Inc.
- Glaeser, Edward L, 1996.
"The Incentive Effects of Property Taxes on Local Governments,"
Springer, vol. 89(1-2), pages 93-111, October.
- Edward L. Glaeser, 1995. "The Incentive Effects of Property Taxes on Local Governments," NBER Working Papers 4987, National Bureau of Economic Research, Inc.
- Rubinfeld, Daniel L., 1987. "The economics of the local public sector," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 11, pages 571-645 Elsevier.
- Randall W. Eberts & Ellen K. Schwartz & Joe A. Stone, 1990. "School reform, school size, and student achievement," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 2-15.
- Roland Benabou, 1991.
"Workings of a City: Location, Education, and Production,"
NBER Technical Working Papers
0113, National Bureau of Economic Research, Inc.
- Roland Benabou, 1993. "Workings of a City: Location, Education, and Production," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 619-652.
- Hamilton, Bruce W, 1976. "Capitalization of Intrajurisdictional Differences in Local Tax Prices," American Economic Review, American Economic Association, vol. 66(5), pages 743-53, December.
- Peltzman, Sam, 1996.
"Political Economy of Public Education: Non-College-Bound Students,"
Journal of Law and Economics,
University of Chicago Press, vol. 39(1), pages 73-120, April.
- Sam Peltzman, 1994. "Political Economy of Public Education: Non-college-bound Students," University of Chicago - George G. Stigler Center for Study of Economy and State 108, Chicago - Center for Study of Economy and State.
- Raquel Fernandez & Richard Rogerson, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 135-164.
- Thomas. J. Nechyba, 1997.
"Existence of equilibrium and stratification in local and hierarchical Tiebout economies with property taxes and voting,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 10(2), pages 277-304.
- Thomas J. Nechyba, 1996. "Existence of Equilibrium and Stratification in Local and Hierarchical Tiebout Economies with Property Taxes and Voting," NBER Technical Working Papers 0190, National Bureau of Economic Research, Inc.
- Brennan, Geoffrey & Buchanan, James M., 1978. "Tax instruments as constraints on the disposition of public revenues," Journal of Public Economics, Elsevier, vol. 9(3), pages 301-318, June.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:6911. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.