Essays in public and urban economics

The first chapter provides evidence on the incidence and distortionary effects of taxes on rental properties, using a unique administrative dataset on housing transactions in Tehran. I exploit a special feature of the tax code in the Tehran rental market where the tax-exemption threshold is based on the property’s size (square meters). Large bunching occurs below the tax cutoff, suggesting strong behavioral responses to the kink. I also find higher after-tax rents above the kink. Based on these variations, I develop a structural framework with property taxes and costs of filing to estimate the price elasticities of housing size supply and demand simultaneously. I also examine the question of who bears the property tax burden. I estimate a mid-run (10-year) price elasticity of housing size supply of 1.36, and a price elasticity of housing size demand of -0.17. I find high, but incomplete pass through of the rental tax - implying that most filing costs are borne by renters. The second chapter provides new evidence on causal impact of air pollution on the housing market. In a co-authored paper, we utilize the dramatic increase in the level of air pollution in Tehran, induced by unprecedented international sanction regimes imposed on Iran because of their nuclear program in 2010. Following some of the sanctions that targeted Iran’s import of gasoline, Iran began rapidly to increase its fuel production capacity by converting petrochemical plants to gasoline production refineries. The policy caused substantial increase in the level of air pollution as a result of the domestically produced low-quality gasoline. Using this natural experiment and unique administrative data on Tehran’s housing market, we find that a 30 parts-per-billion increase of outdoor concentration of Nitrogen Dioxide leads to approximately a 3 to 6 percent decrease in housing prices. We also find that higher price-rent ratio is associated with lower level of air pollution. Our welfare analysis suggests that air quality deteriorations induced by the 2010 gasoline sanctions are associated with $11 to $16 billion aggregate reduction in housing values in 2011.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2017

Author dc:creator

• Nafari, Kaveh

Contributors dc:contributor

• Albouy, David
• Fullerton, Don
• Marx, Benjamin
• Reif, Julian

• Housing market
• Air pollution
• Property taxes

Statement dc:rights

• Copyright 2017 Kaveh Nafari

Language dc:language

en

Handle dc:identifier

http://hdl.handle.net/2142/97348

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/97348