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Local response to fiscal incentives in heterogeneous communities

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  • Rockoff, Jonah E.

Abstract

I examine the impact of a property tax-relief program in New York State that lowered the marginal cost of school expenditure to homeowners. I find that a typical school district, which received 20% of its revenue through the program in the school year 2001-2002, raised expenditure by 4.1% and local property taxes by 6.8% in response to the program. I then examine how the preferences of various groups of local taxpayers affect educational spending by identifying systematic variation across districts in the response to fiscal incentives. These results support the hypothesis that homeowners are more influential on local expenditure decisions than renters, owners of second homes, or owners of non-residential property.

Suggested Citation

  • Rockoff, Jonah E., 2010. "Local response to fiscal incentives in heterogeneous communities," Journal of Urban Economics, Elsevier, vol. 68(2), pages 138-147, September.
    • Handle: RePEc:eee:juecon:v:68:y:2010:i:2:p:138-147
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    Cited by:

    1. Tae Ho Eom & William Duncombe & Phuong Nguyen-Hoang & John Yinger, 2014. "The Unintended Consequences of Property Tax Relief: New York’s STAR Program," Education Finance and Policy, MIT Press, vol. 9(4), pages 446-480, October.
    2. Michael Dinerstein & Troy D. Smith, 2021. "Quantifying the Supply Response of Private Schools to Public Policies," American Economic Review, American Economic Association, vol. 111(10), pages 3376-3417, October.
    3. Kakamu, Kazuhiko & Yunoue, Hideo & Kuramoto, Takashi, 2014. "Spatial patterns of flypaper effects for local expenditure by policy objective in Japan: A Bayesian approach," Economic Modelling, Elsevier, vol. 37(C), pages 500-506.
    4. Tae Ho Eom & William Duncombe & Phuong Nguyen-Hoang & John Yinger, 2014. "The Unintended Consequences of Property Tax Relief: New York’s STAR Program," Education Finance and Policy, MIT Press, vol. 9(4), pages 446-480, October.
    5. Anderson, Nathan B., 2012. "Market value assessment and idiosyncratic tax-price risk: Understanding the consequences of alternative definitions of the property tax base," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 545-560.
    6. Rajashri Chakrabarti & Max Livingston & Joydeep Roy, 2014. "Did Cuts in State Aid During the Great Recession Lead to Changes in Local Property Taxes?," Education Finance and Policy, MIT Press, vol. 9(4), pages 383-416, October.
    7. Jason Giersch, 2014. "Effects of vacation properties on local education budgets," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-9, December.
    8. Rajashri Chakrabarti & Nicole Gorton & Joydeep Roy, 2018. "Getting ahead by spending more? Local community response to state merit aid programs," Staff Reports 872, Federal Reserve Bank of New York.
    9. Buerger, Christian & Bifulco, Robert, 2019. "The effect of charter schools on districts’ student composition, costs, and efficiency: The case of New York state," Economics of Education Review, Elsevier, vol. 69(C), pages 61-72.
    10. Anderson, Nathan B., 2011. "No relief: Tax prices and property tax burdens," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 537-549.
    11. Fitzpatrick, Maria D., 2017. "Pension-spiking, free-riding, and the effects of pension reform on teachers' earnings," Journal of Public Economics, Elsevier, vol. 148(C), pages 57-74.
    12. Jingran Sun & Robert Bland & Linfeng Yue, 2023. "The impact of property tax exemptions on the effective property tax rate: evidence from 41 Texas cities," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(3), pages 2211-2230, June.
    13. Antti Saastamoinen & Mika Kortelainen, 2020. "When Does Money Stick in Education? Evidence from A Kinked Grant Rule," Education Finance and Policy, MIT Press, vol. 15(4), pages 708-735, Fall.
    14. John Yinger & Phuong Nguyen-Hoang, 2015. "The Behavioral Impacts of Poverty Tax Relief: Salience or Framing?," Center for Policy Research Working Papers 186, Center for Policy Research, Maxwell School, Syracuse University.

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