Neighborhood effects in social service provision. Competition or reflection?
Expenditures by local goverments often exhibit positive spatial autocorrelation. A spatial pattern might arise either from an endogenous effect (with local authorities being affected by the average behavior in the neighborhood) or from exogenous/correlated effects(with the behavior of close-by authorities simply reflecting common neighborhood characteristics or correlated shocks).In order to identify the underlying spatial process, this paper models the determination of local expenditure on social services within a spatial framework that allows interdependent local authority behavior and spatially auto-correlated shocks, and performs an empirical analysis on a cross-section of UK local goverments. The IV (instrumental variables)and ML (maximum likelihood) estimates of a SAR (spatial auto-regressive) model, as well asthe ML estimates of SARMA (spatial auto-regressive moving average) model suggest that the most likely source of spatial auto-correlation in social spending is endogenous mimicking among neighboring localities.
|Date of creation:||Dec 2002|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +39 011670 4406
Fax: +39 011670 3895
Web page: http://www.unito.it/
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.:
- Fredriksson, Per G. & Millimet, Daniel L., 2002. "Strategic Interaction and the Determination of Environmental Policy across U.S. States," Journal of Urban Economics, Elsevier, vol. 51(1), pages 101-122, January.
- Figlio, David N. & Kolpin, Van W. & Reid, William E., 1999. "Do States Play Welfare Games?," Journal of Urban Economics, Elsevier, vol. 46(3), pages 437-454, November.
- Craig Brett & Joris Pinkse, 2000. "The determinants of municipal tax rates in British Columbia," Canadian Journal of Economics, Canadian Economics Association, vol. 33(3), pages 695-714, August.
- Smith, Patricia K, 1991. " An Empirical Investigation of Interstate AFDC Benefit Competition," Public Choice, Springer, vol. 68(1-3), pages 217-33, January.
- Jan K. Brueckner & Luz A. Saavedra, 2000.
"Do Local Governments Engage in Strategic Property-Tax Competition?,"
Econometric Society World Congress 2000 Contributed Papers
0357, Econometric Society.
- Brueckner, Jan K. & Saavedra, Luz A., 2001. "Do Local Governments Engage in Strategic Property-Tax Competition?," National Tax Journal, National Tax Association, vol. 54(n. 2), pages 203-30, June.
- Brueckner, Jan K., 1998. "Testing for Strategic Interaction Among Local Governments: The Case of Growth Controls," Journal of Urban Economics, Elsevier, vol. 44(3), pages 438-467, November.
- Heyndels, Bruno & Vuchelen, Jef, 1998. "Tax Mimicking Among Belgian Municipalities," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 89-101, March.
- Case, Anne C. & Rosen, Harvey S. & Hines, James Jr., 1993. "Budget spillovers and fiscal policy interdependence : Evidence from the states," Journal of Public Economics, Elsevier, vol. 52(3), pages 285-307, October.
- repec:att:wimass:9127 is not listed on IDEAS
- Wheaton, William C., 2000. "Decentralized Welfare: Will There Be Underprovision?," Journal of Urban Economics, Elsevier, vol. 48(3), pages 536-555, November.
- Timothy Besley & Anne Case, 1992.
"Incumbent Behavior: Vote Seeking, Tax Setting and Yardstick Competition,"
NBER Working Papers
4041, National Bureau of Economic Research, Inc.
- Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
- Bivand, Roger & Szymanski, Stefan, 2000. "Modelling the spatial impact of the introduction of Compulsory Competitive Tendering," Regional Science and Urban Economics, Elsevier, vol. 30(2), pages 203-219, March.
- Thiess Buettner, 2001.
"Local Business Taxation and Competition for Capital: The Choice of the Tax Rate,"
CESifo Working Paper Series
440, CESifo Group Munich.
- Buettner, Thiess, 2001. "Local business taxation and competition for capital: the choice of the tax rate," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 215-245, April.
- Büttner, Thiess, 1998. "Local Business Taxation and Competition for Capital: The Choice of the Tax Rate," ZEW Discussion Papers 98-43, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Pollak, Robert A, 1976. "Interdependent Preferences," American Economic Review, American Economic Association, vol. 66(3), pages 309-20, June.
- Shroder, Mark, 1995. "Games the States Don't Play: Welfare Benefits and the Theory of Fiscal Federalism," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 183-91, February.
- Bivand, Roger & Szymanski, Stefan, 1997. "Spatial dependence through local yardstick competition:: theory and testing," Economics Letters, Elsevier, vol. 55(2), pages 257-265, August.
- Alessie, Rob & Kapteyn, Arie, 1991. "Habit Formation, Interdependent References and Demographic Effects in the Almost Ideal Demand System," Economic Journal, Royal Economic Society, vol. 101(406), pages 404-19, May.
- Oates, Wallace E., 2001. "Fiscal competition and European Union: contrasting perspectives," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 133-145, April.
- Fredriksson, Per G. & Millimet, Daniel L., 2002. "Is there a 'California effect' in US environmental policymaking?," Regional Science and Urban Economics, Elsevier, vol. 32(6), pages 737-764, November.
- Revelli, Federico, 2002. "Local taxes, national politics and spatial interactions in English district election results," European Journal of Political Economy, Elsevier, vol. 18(2), pages 281-299, June.
- Federico Revelli, 2001. "Spatial patterns in local taxation: tax mimicking or error mimicking?," Applied Economics, Taylor & Francis Journals, vol. 33(9), pages 1101-1107.
- Case, Anne C, 1991. "Spatial Patterns in Household Demand," Econometrica, Econometric Society, vol. 59(4), pages 953-65, July.
- Manski, Charles F, 1993.
"Identification of Endogenous Social Effects: The Reflection Problem,"
Review of Economic Studies,
Wiley Blackwell, vol. 60(3), pages 531-42, July.
- Federico Revelli, 2002. "Testing the taxmimicking versus expenditure spill-over hypotheses using English data," Applied Economics, Taylor & Francis Journals, vol. 34(14), pages 1723-1731.
When requesting a correction, please mention this item's handle: RePEc:uto:dipeco:200206. 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: (Piero Cavaleri)or (Marina Grazioli)
If references are entirely missing, you can add them using this form.