Working Paper: NBER ID: w11720
Authors: Stephen Calabrese; Dennis Epple; Thomas Romer; Holger Sieg
Abstract: Few empirical strategies have been developed that investigate public provision under majority rule while taking explicit account of the constraints implied by mobility of households. The goal of this paper is to improve our understanding of voting in local communities when neighborhood quality depends on peer or neighborhood effects. We develop a new empirical approach which allows us to impose all restrictions that arise from locational equilibrium models with myopic voting simultaneously on the data generating process. We can then analyze how close myopic models come in replicating the main regularities about expenditures, taxes, sorting by income and housing observed in the data. We find that a myopic voting model that incorporates peer effects fits all dimensions of the data reasonably well.
Keywords: local public goods; voting; peer effects; mobility
JEL Codes: H4; H7; H1; R5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| myopic voting model with peer effects (D79) | accuracy of predictions regarding public good provision outcomes (H40) |
| peer effects (C92) | educational attainment (I21) |
| peer effects (C92) | preferences for neighborhood composition (R20) |
| housing market equilibrium, public good provision, and mobility effects (R31) | interactions (L14) |