We present a dynamic two-region model with overlapping generations. There are two types of public expenditure, education and infrastructure funding, and governments decide optimally on budget size (tax rate) and its allocation across the two outlays. Productivity of government infrastructure...

We identify exogenous variation in incumbent policymakers’ re-election probabilities and explore empirically how this variation affects their investments in physical capital. Our results indicate that a higher re-election probability leads to higher investments, particularly in the purposes...

The United States currently incarcerates a higher share of its population than any other country in the world. We calculate that a reduction in incarceration rates just to the level we had in 1993 (which was already high by historical standards) would lower correctional expenditures by $16.9...

Exploiting spatial and temporal variations in the number of seizures from criminal organizations, I estimate regional fixed effects models of the increase in the number of properties confiscated on the main crime rates. From 2002 security strategies changed, and as a result, the effects on crime...

We test the hypothesis that local government officials in jurisdictions that have higher local sales taxes are more likely to use fiscal zoning to attract retailing. We find that total retail employment is not significantly affected by local sales tax rates, but employment in big box and anchor...

Recent studies point to a positive correlation between ethnic heterogeneity due to immigration and the propensity of opting out from public schools for private alternatives. However, immigration across regions is hardly exogenous, which obstructs attempts to reveal causal mechanisms. This paper...

We examine the efficiency properties of labor taxation. A spatial model of an economy is introduced whose key feature is a new approach to restricted labor mobility. We characterize the efficient allocation of labor and properties of a decentralized equilibrium. An efficient allocation of labor...

One challenge states face in designing an income tax system is deciding how to treat non-resident earners. Numerous states have entered into reciprocity agreements with other states that exclude non-residents’ income from the tax base. These agreements provide a unique opportunity to explore...

Recent experience with disasters and terrorist attacks in the US indicates that state and local governments rely on the federal sector for support after disasters occur. But these same governments are responsible for investing in infrastructure designed to reduce vulnerability to natural and...

Choice and competition in education have found growing support from both policy makers and academics in the recent past. Yet, evidence on the actual benefits of market-oriented reforms is at best mixed. Moreover, while the economic rationale for choice and competition is clear, in existing work...