This paper models theoretically and investigates empirically the consequences on local economic performance of state mandates on financially distressed authorities. In particular, I analyze the switch from systematic state bailout of regional health care deficits to selectively mandated hikes in...

Combining a spatial equilibrium model with a matching unemployment model, this paper analyzes the regional quality of life when wages, rents, and unemployment risk compensate for local amenities and disamenities. In particular, the paper shows for quasi-linear utility that the effects of any...

In this paper, we pursue several goals; we first check if the downward trend in corporate income tax rates in Europe reflects a strategy of tax competition, and not a "yardstick competition" in neighboring countries. We estimate the scale of fiscal externalities on neighboring countries in terms...

This paper contribtes to the small empirical literature dealing with strategic tax behaviors of small EU countries. We estimate tax reaction functions of national governments competing with each other. Deriving a simple model of tax competition in a Nash and Stackelberg framework, we use panel...

In this article we examine the relationship between property tax rates and tax base growth in southeast Michigan using data for all 152 communities in the five counties surrounding Detroit over the 1983–2002 period. To address endogeneity, we exploit the adoption of Proposal A in 1994, which...

State preemption laws strictly limit local governments from regulating beyond their borders. Local governments, however, face a broad spectrum of challenges which cannot be confined to municipal borders. These challenges freely flow in and out of many local jurisdictions at the same time. The...

We examine the effect of interstate differences in income taxes on commuting times. Our theoretical model introduces a border into a model of an urban area and shows that differences in average tax rates distort commuting patterns, but the sign of the effect depends on whether taxes are...

Tiebout's (1956) model of fiscal competition suggests income sorting between jurisdictions while the Alonso (1964), Mills (1967) and Muth (1969) model of the monocentric city suggests income sorting over space. However, strict income sorting is not empirically observed. We add fiscal competition...

A circular metropolitan area consists of an inner city and a suburb. Households sort over the two jurisdictions based on public service levels and their costs of commuting to the metropolitan center. Using numerical simulations, we show (1) there typically exist two equilibria: One in which the...

We seek to explain the stylized fact that poor households form the majority in the inner city of most American metropolitan areas. Using numerical simulations, we show that (1) typically there exist two equilibria: One in which the poor form the majority in the inner city and the other in which...