Three essays in the economics of local public goods

This thesis is a collection of three empirical essays on the economics of local public goods. Chapter One examines the marginal propensity of local governments to spend out of lump- sum grant income. Economic theory predicts that this marginal propensity will equal the marginal propensity to spend on public goods out of private income. A large empirical literature contradicts the prediction. A school finance reform in the state of New Hampshire is used to test the prediction. The use of direct democracy to determine the provision level of local public goods in New Hampshire provides a uniquely appropriate environment in which to conduct the test. The results provide support for the theoretical prediction. Chapter Two examines the most significant locally provided public good, education. Specifically, the chapter examines the end of court-ordered desegregation. The widespread termination of desegregation plans in the post 1990 period has returned a large number of school districts to local control and ended efforts to promote racial integration. The results suggest that the termination of a desegregation plan results in a gradual, moderate increase in racial segregation and an increase in black dropout rates and rates of black private school attendance in localities located outside the South census region. There is no effect on black dropout rates or rates of black private school attendance in the South. Chapter Three examines the impact of the most significant local tax, the property tax, on capital investment. The results suggest that the elasticity of residential capital investment with respect to the property tax is -1.9 to -.8.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Economics.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2005

Author dc:creator

• Lutz, Byron F

Advisor dc:contributor.advisor

• Josh Angrist, Michael Greenstone and David Autor.

• Economics.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/32403

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/32403