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Neighborhood Influence and Political Change: Evidence from US School Districts

  • Johannes Rincke

    (Zentrum für Europäische Wirtschaftsforschung)

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    This paper investigates how local jurisdictions in a federal system influence each other in the adoption of policy innovations. We look at school districts in Michigan and their participation in a public school choice program launched in 1996. Districts' participation decisions are modelled as simultaneous discrete choice decisions using a spatial latent variable model. Strong effects are found saying that lagged adoptions of neighbors positively affect the current probability of participation. This finding is robust to various changes in specification. The results suggest that in federal systems the diffusion of policy innovations is stimulated by horizontal interactions between jurisdictions.

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    File URL: http://econwpa.repec.org/eps/pe/papers/0511/0511011.pdf
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    Paper provided by EconWPA in its series Public Economics with number 0511011.

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    Date of creation: 16 Nov 2005
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    Handle: RePEc:wpa:wuwppe:0511011
    Note: Type of Document - pdf
    Contact details of provider: Web page: http://econwpa.repec.org

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    1. Timothy Besley & Anne Case, 1992. "Incumbent Behavior: Vote Seeking, Tax Setting and Yardstick Competition," NBER Working Papers 4041, National Bureau of Economic Research, Inc.
    2. 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.
    3. Nikolaus Hautsch & Stefan Klotz, 2001. "Estimating the Neighborhood Influence on Decision Makers: Theory and an Application on the Analysis of Innovation Decisions," CoFE Discussion Paper 01-04, Center of Finance and Econometrics, University of Konstanz.
    4. Case, Anne, 1992. "Neighborhood influence and technological change," Regional Science and Urban Economics, Elsevier, vol. 22(3), pages 491-508, September.
    5. David Hirshleifer & Siew Hong Teoh, 2003. "Herd Behaviour and Cascading in Capital Markets: a Review and Synthesis," European Financial Management, European Financial Management Association, vol. 9(1), pages 25-66.
    6. Johannes Rincke, 2005. "Policy Innovation in Local Jurisdictions: Testing the Neighborhood Influence Against the Free-Riding Hypothesis," Public Economics 0511017, EconWPA.
    7. Christos Kotsogiannis & Robert Schwager, 2005. "Policy Innovation In Federal Systems," Urban/Regional 0504001, EconWPA.
    8. Krasker, William S. & Kuh, Edwin & Welsch, Roy E., 1983. "Estimation for dirty data and flawed models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 1, chapter 11, pages 651-698 Elsevier.
    9. Gale, Douglas, 1996. "What have we learned from social learning?," European Economic Review, Elsevier, vol. 40(3-5), pages 617-628, April.
    10. Rincke, Johannes, 2005. "Policy Innovation in Local Jurisdictions: Testing the Neighborhood Influence Against the Free-Riding Hypothesis," ZEW Discussion Papers 05-08, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    11. Caroline Minter Hoxby, 1994. "Does Competition Among Public Schools Benefit Students and Taxpayers?," NBER Working Papers 4979, National Bureau of Economic Research, Inc.
    12. 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.
    13. Johannes Rincke, 2005. "Policy Innovation in Local Jurisdictions: Testing the Neighborhood Influence Against the Free-Riding Hypothesis," Public Economics 0511009, EconWPA.
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