Working Paper: NBER ID: w4333
Authors: Raquel Fernandez; Richard Rogerson
Abstract: This paper examines the effect of community zoning regulations on allocations and welfare in a two-community model. Each community uses a local property tax to finance public education. Tax rates are determined by majority vote within each community, and individuals choose in which community to reside. We study exogenously imposed zoning regulations as well as the case where the regulator is endogenously determined by majority vote. Our analysis indicates that a number of outcomes are theoretically possible. Several interesting results emerge from simulations of the model. Although zoning tends to make the rich community more exclusive, this need not increase the quality of education in the rich community relative to the poor community. Welfare effects are not monotone in income; some lower income individuals benefit and some higher income individuals are made worse off when zoning is introduced.
Keywords: Zoning; Public Education; Income Distribution; Welfare Effects
JEL Codes: H75; I21; R52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| zoning regulations (R52) | community composition (Q57) |
| community composition (Q57) | welfare (I38) |
| zoning regulations (R52) | welfare (I38) |
| zoning regulations (R52) | public education quality (I21) |
| community income distribution (D31) | public education quality (I21) |