New York's School Tax Relief Program, STAR, provides state-funded property tax relief for homeowners. Like a matching grant, STAR changes the price of public services, thereby altering the incentives of voters and school officials and leading to unintended consequences. Using data for New York...

This chapter reviews the literature on the boundary between urban economics and local public finance, defined as research that considers both a housing market and the market for local public services. The first part of the chapter considers positive theories. This part presents the consensus...