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A Test for Efficiency in the Supply of Local Public Education

Author

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  • Ted Bergstrom

    (University of Michigan, Economic)

  • Judy Roberts
  • Dan Rubinfeld
  • Perry Shapiro

Abstract

This paper devises and applies a statistical test for efficient provision of local public education. The test is based on the ``Samuelson condition'' of equality between the sum of marginal rates of substitution and marginal cost. The econometric method is a micro-based approach to the estimation of the marginal rate of substitution function. This method accounts for possible ``Tiebout bias'' caused by the fact that individuals may choose their school districts in accordance with their tastes for education.

Suggested Citation

  • Ted Bergstrom & Judy Roberts & Dan Rubinfeld & Perry Shapiro, 1988. "A Test for Efficiency in the Supply of Local Public Education," Papers _036, University of Michigan, Department of Economics.
    • Handle: RePEc:wop:michec:_036
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    File URL: http://www.econ.ucsb.edu/~tedb/PubFin/pubtest.ps
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    References listed on IDEAS

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    1. Shapiro, Perry & Sonstelie, Jon, 1982. "Did Proposition 13 Slay Leviathan?," American Economic Review, American Economic Association, vol. 72(2), pages 184-190, May.
    2. Bergstrom, Theodore C & Rubinfeld, Daniel L & Shapiro, Perry, 1982. "Micro-Based Estimates of Demand Functions for Local School Expenditures," Econometrica, Econometric Society, vol. 50(5), pages 1183-1205, September.
    3. Goldstein, G. S. & Pauly, M. V., 1981. "Tiebout bias on the demand for local public goods," Journal of Public Economics, Elsevier, vol. 16(2), pages 131-143, October.
    4. Bewley, Truman F, 1981. "A Critique of Tiebout's Theory of Local Public Expenditures," Econometrica, Econometric Society, vol. 49(3), pages 713-740, May.
    5. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922.
    6. Gramlich, Edward M & Rubinfeld, Daniel L, 1982. "Micro Estimates of Public Spending Demand Functions and Tests of the Tiebout and Median-Voter Hypotheses," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 536-560, June.
    7. Courant, Paul N & Gramlich, Edward M & Rubinfeld, Daniel L, 1979. "Public Employee Market Power and the Level of Government Spending," American Economic Review, American Economic Association, vol. 69(5), pages 806-817, December.
    8. Joseph E. Stiglitz, 1982. "The Theory of Local Public Goods Twenty-Five Years After Tiebout: A Perspective," NBER Working Papers 0954, National Bureau of Economic Research, Inc.
    9. Alan Williams, 1966. "The Optimal Provision of Public Goods in a System of Local Government," Journal of Political Economy, University of Chicago Press, vol. 74(1), pages 18-33.
    10. John Ledyard, 1984. "The pure theory of large two-candidate elections," Public Choice, Springer, vol. 44(1), pages 7-41, January.
    11. Howard R. Bowen, 1943. "The Interpretation of Voting in the Allocation of Economic Resources," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 58(1), pages 27-48.
    12. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    13. Bergstrom, Ted C, 1979. " When Does Majority Rule Supply Public Goods Efficiently?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 216-226.
    14. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    15. Barlow, Robin, 1970. "Efficiency Aspects of Local School Finance," Journal of Political Economy, University of Chicago Press, vol. 78(5), pages 1028-1040, Sept.-Oct.
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    Cited by:

    1. Barrow, Lisa & Rouse, Cecilia Elena, 2004. "Using market valuation to assess public school spending," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1747-1769, August.
    2. Lars P. Feld & Gebhard Kirchgässner, 2005. "Sustainable Fiscal Policy in a Federal System: Switzerland as an Example," Palgrave Macmillan Books, in: Hanspeter Kriesi & Peter Farago & Martin Kohli & Milad Zarin-Nejadan (ed.), Contemporary Switzerland, chapter 12, pages 281-296, Palgrave Macmillan.
    3. Wiktor Adamowicz & Mark Dickie & Shelby Gerking & Marcella Veronesi & David Zinner, 2014. "Household Decision Making and Valuation of Environmental Health Risks to Parents and Their Children," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(4), pages 481-519.
    4. Ahlin, A. & Johansson, E., 2000. "Demand for Local Public Schooling: Another Brick in the Wall," Papers 2000:120, Uppsala - Working Paper Series.
    5. Stair, Anthony & Rephann, Terance J. & Heberling, Matt, 2006. "Demand for public education: Evidence from a rural school district," Economics of Education Review, Elsevier, vol. 25(5), pages 521-531, October.
    6. Åsa Ahlin & Eva Johansson, 2001. "Individual Demand for Local Public Schooling: Evidence from Swedish Survey Data," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(4), pages 331-351, August.
    7. Robert P. Inman & Daniel L. Rubinfeld, 1997. "Rethinking Federalism," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 43-64, Fall.
    8. Kelchtermans, Stijn & Verboven, Frank, 2010. "Program duplication in higher education is not necessarily bad," Journal of Public Economics, Elsevier, vol. 94(5-6), pages 397-409, June.
    9. Stijn Kelchtermans & Frank Verboven, 2007. "Reducing product diversity in higher education," Working Papers of Department of Economics, Leuven ces0726, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    10. Hamilton, Stephen F. & Sunding, David L. & Zilberman, David, 2003. "Public goods and the value of product quality regulations: the case of food safety," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 799-817, March.
    11. Lisa Barrow & Cecilia Elena Rouse, 2000. "Using market valuation to assess the importance and efficiency of public school spending," Working Paper Series WP-00-4, Federal Reserve Bank of Chicago.
    12. Bofinger, Peter & Schnabel, Isabel & Feld, Lars P. & Schmidt, Christoph M. & Wieland, Volker, 2014. "Mehr Vertrauen in Marktprozesse. Jahresgutachten 2014/15 [More confidence in market processes. Annual Report 2014/15]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201415.
    13. Lars P Feld, 2004. "On Tax Competition: The (Un-)Expected Advantages of Decentralized Fiscal Autonomy," Marburg Working Papers on Economics 200425, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    14. Robert P. Inman, 1993. "Presidential Leadership and the Reform of Fiscal Policy: Learning from Reagan's Role in TRA 86," NBER Working Papers 4395, National Bureau of Economic Research, Inc.

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