Subnational Fiscal Issues

Policy Responses to Tax Competition provides an in-depth exploration of how jurisdictions design taxes on mobile economic factors. Tax competition between jurisdictions that seek to attract businesses and residents presents both opportunities and challenges. It can foster government efficiency and...

How does early educational quality affect longer-term academic outcomes? We shed light on this question via a natural experiment in the Philippinesthe implementation of a mother tongue education policy in public schools in kindergarten to Grade 3. This policy led to an unexpected decline in...

We examine the multigenerational impacts of legalized abortion in the United States by analyzing how early-life exposure to this policy shift affects birth outcomes in the next generation. Using event study and two-way fixed effects models, we link maternal early-life exposure to legal abortion with...

Property taxes represent the largest discretionary revenue source for local governments in the United States. Because these taxes are collected by applying a tax rate to an assessed value of a property, the effective tax rate on a property computed as a percentage of its value depends on the tax...

In 2009, responding to the so-called Great Recession, the federal government initiated a stimulus program, the American Recovery and Reinvestment Act (ARRA), that included infrastructure spending. The state of Texas used this funding to improve highways. It reaped a double benefit: the spending...

Place-based policy in the United States comprises a wide range of government programs that are spread across federal, state, and local agencies and that rely on public, private, and nonprofit organizations for policy design and implementation. We document how loosely connected vertical policy supply...

Increasing within-country disparities have led policymakers to deploy public employment reallocation as a place-based policy tool to support struggling regions. This paper surveys the economics literature on capital relocations, purpose-built capitals, and public agency decentralization programs,...

Particulate matter (PM) is a major, clinically important air pollutant. A large portion of emitted PM crosses borders, damaging health outside of its originating jurisdiction, but due in part to technical obstacles these pollutant flows remain unregulated. Proposed attribution approaches assume that...

In 1975, a federal court ordered the desegregation of public schools in Jefferson County, KY. In order to approximately equalize the share of minorities across schools, students were assigned to a busing schedule that depended on the first letter of their last name. We use the resulting quasi-random...

Setting payment rates for providers contracted over multiple periods is a persistent challenge in government procurement. We study the dynamics of fiscal costs following the outsourcing of Medicaid provision to private health insurers by states. We focus on beneficiaries with disabilities who...

Underrepresented minority (URM) college students have been steadily earning degrees in relatively less lucrative fields of study since the mid-1990s. A decomposition reveals that this widening gap is principally explained by rising stratification at public research universities, many of which...

We study highway procurement in Texas during the Great Recession and stimulus period, finding increased competition with more bidders and lower bids. We argue that the recession reduced opportunity costs, in part due to a slump in private-sector construction. We evaluate costs and efficiency by...

Place-based programs aim to encourage economic and community development in defined geographic areas. They frequently offer tax incentives, grants, loans, or regulatory relief to private or non-profit entities for investing in specific communities. Funding can support a range of activities,...

This paper investigates the relationship between tax progressivity and compliance. We leverage a major progressive tax reform in a large Argentine municipality. First, we use a quasi-experimental design to estimate the causal effect of changes in a households own tax rates on its tax compliance....

How does gender composition influence individual and group behavior? To study this question empirically, we assembled a new, national sample of United States city council elections and digitized information from the minutes of over 40,000 city-council meetings. We find that replacing a male...

Property tax revenues the largest discretionary source of revenue for local governments - adjust at a pace that is inconsistent with property values in the US. We show that this form of revenue smoothing may be rooted in the political economy of municipalities. Measures of local budget stressors...

Beginning in the 1970s, many state courts declared the widespread inequality in education spending across schools to violate their states constitution. Funding systems then emerged providing differing approaches to state and local support of education. We develop a theoretical framework and...

We evaluate private equity (PE) performance using investor-specific stochastic discount factors, and examine whether investors could benefit from changing their allocation to PE. Plans invest in PE funds with higher average risk-adjusted performance. This is mainly due to access to successful PE...

Switzerland could be considered as something of a test case for international corporate-tax policy coordination. It is a federation of 26 fiscally autonomous cantons that have been taxing corporate profits more or less independently for over a century. We document and discuss corporate taxation in...

The COVID-19 pandemic led to unprecedented levels of federal transfers to state governments. Did this funding increase benefit incumbent politicians electorally? Identifying the effect of revenue windfalls on voting is challenging because whatever conditions led to the influx of cash might also...

Our purpose is three-fold. First, we summarize some of the core insights from both classic and more recent papers in the literature on the role of intergovernmental grants in systems of fiscal federalism. Second, we provide an updated look at some of the key institutions through which...

This paper catalogues policies that have been deployed by jurisdictions seeking to mitigate the effects of tax competition. It takes a broad approach, recognizing that there are many instruments in the policy arsenal and that the tax base associated with a particular tax instrument may be affected...

Inefficiencies from tax competition may result in governments seeking to limit fiscal competition via tax treaties, harmonization, minimum tax rates, or interjurisdictional cooperation. I propose a general model applicable to studying many types of taxing instruments, which allows for the comparison...

We examine how politics and policy have affected remote-work rates in the wake of the COVID-19 pandemic. Using the Current Population Survey, American Community Survey, and the American Time Use Survey, which have several different measures of remote work, we examine how trends in remote work vary...

Several states have recently attempted to boost retirement saving by adopting auto-IRA policies that require employers not currently offering an employer-sponsored retirement plan (ESRP) to either (1) establish an ESRP or (2) enroll employees in state-facilitated Individual Retirement Accounts (IRAs...

Can the provision of public goods strengthen the fiscal capacity of governments in developing countries and move them toward an equilibrium of widespread tax compliance? We present evidence of the impact of local public infrastructure on tax compliance, leveraging a large public investment...

Empirical research in public economics, including our own, often uses variation in state and local taxes as an empirical laboratory to estimate causal relationships. A key concern is that other taxes might change at the same time. To assess this concern, we develop a dataset of state (19772022) and...

The charter school movement encompasses many school models. In Massachusetts in the 2010s, the site of our study, urban charter schools primarily used No Excuses practices, whereas nonurban charters had greater model variety. Using randomized admissions lotteries, we estimate the impact of charter...

Enrollment in one public benefit program often affects enrollment in others. We study life-course spillovers by examining how access to publicly subsidized health insurance prior to age 65 affects public benefit choices at the age of Medicare eligibility. We use administrative data to examine...

We examine a statewide program that identifies police departments with large racial disparities in traffic stops and works with identified departments to reduce disparities. The intervention caused large (23.56%) and persistent (at least 12 months) reductions in the number of minorities involved in...

Interest paid by U.S. state and local bonds is tax-exempt, making these bonds attractive to investors though a tax rule limits arbitrage opportunities by restricting associated interest expense deductions. Prior to 1986, U.S. banks were not subject to the interest deduction limitation, making banks...

Attending a four-year college eventually results in higher earnings, even for marginal students whose high school records do not guarantee admission. In Marginal Returns to Public Universities (NBER Working Paper 32296), Jack Mountjoy studies the post-college earnings of students in Texas who are on...

Distribution choices by individuals retiring from CalSTRS are examined for participants that retired between 2016 and 2023. Women are much more likely to select a member-only annuity while a larger proportion of men select a J&S annuity that provide survivor benefits. Being married is a dominant...

We provide evidence on the role of perceived fairness for tax compliance: households are more willing to pay taxes when they believe others are contributing their fair share. We conducted a natural field experiment in the context of U.S. property taxes. Through an information-disclosure experiment,...

Evidence on cannabis legalizations effects on mental health remains scarce, despite both rapid increases in cannabis use and an ongoing mental health crisis in the United States. We use granular geographic data to estimate medical cannabis dispensary availabilitys effects on self-reported mental...

Using data on U.S. state and federal taxes and transfers over a quarter century, we estimate a regression model that yields the marginal effect of any shift of market income share from one quintile to another on the entire post tax, post-transfer income distribution. We identify exogenous income...

Neoclassical economic theory predicts that ordeals, such as work requirements, improve transfer program targeting. Means-tested transfer programs in the U.S. are increasingly adding or considering adding work requirements. We provide the first causal estimates of the two largest work requirements in...

This paper investigates how non-tax revenues impact tax collection in Brazilian municipalities, focusing on shifts in intergovernmental transfers due to population updates. Our analysis reveals asymmetric effects of shocks: revenue gains lead to increased spending without tax reductions, while...

The design of mechanisms for allocating tasks among agents is a central question in economics, with applications across various high-stakes settings. In many of these market-design problems, new mechanisms are introduced to reform existing assignment systems. Unlike mechanisms developed in isolation...

Education policy, while primarily the responsibility of the state governments, involves complicated decision making at the local, state, and federal levels. The federal involvement dramatically increased with the introduction of test-based accountability under the No Child Left Behind Act of 2001....

This paper studies the causal impacts of public universities on the outcomes of their marginally admitted students. I use administrative admission records spanning all 35 public universities in Texas, which collectively enroll 10 percent of American public university students, to systematically...

Support from local citizens is important for the scale-up of renewable energy. We investigate the impact of utility-scale wind and solar parks on employment, GDP and public finances in Brazilian municipalities using a difference-in-differences design with matching. We find a positive employment...

We study the effect of mandates requiring COVID-19 vaccination among healthcare industry workers adopted in 2021 in the United States. There are long-standing worker shortages in the U.S. healthcare industry, pre-dating the COVID-19 pandemic. The impact of COVID-19 vaccine mandates on shortages is...

Using rural household survey data from West Bengal, we find that voters respond positively to excludable government welfare benefits but not to local public good programs, while reporting having benefited from both. Consistent with these voting patterns, shocks to electoral competition induced by...

It has been argued that since 2014, under the BJP-led central government, welfare benefits in India have become better targeted and less prone to clientelistic control by state and local governments. Arguably this has helped to increase the vote share of the BJP vis-a-vis regional parties. We test...

Using a rich dataset that merges student-level school records with birth records, and leveraging three alternative identification strategies, we explore how increase in access to charter schools in twelve districts in Florida affects students remaining in traditional public schools (TPS). We...

This paper catalogues policies that have been deployed by jurisdictions seeking to mitigate the effects of tax competition. There are many instruments in this policy arsenal, since the tax base associated with a particular tax instrument may be affected by multiple policy choices, including some...

This paper identifies which investments in school facilities help students and are valued by homeowners. Using novel data on school district bonds, test scores, and house prices for 29 U.S. states and a research design that exploits close elections with staggered timing, we show that increased...

This paper provides the first theoretical framework and empirical evidence on the impact of housing presale policies on unfinished buildings and developer behavior. We start with constructing a novel dataset of unfinished projects, presale policies, and land auction outcomes across 270 major cities...