IDEAS home Printed from https://ideas.repec.org/p/ags/wisagr/12638.html
   My bibliography  Save this paper

Government, Effectiveness, Performance and Local Property Values

Author

Listed:
  • Deller, Steven C.
  • Maher, Craig

Abstract

We offer a practical test of local government effectiveness in the provision of public services. Building on the work of Brueckner (1979, 1982, 1983) and Henderson (1990, 1995) we offer a property value maximization model where levels of local public services are capitalized into property values. Using data for Wisconsin municipalities we demonstrate that service expenditure levels, and corresponding taxation levels, should be increased. In other words, the property value maximization test suggests that local public services in Wisconsin are consistently under-provided. By monitoring local property values officials can objectively determine if public services are being provided in an optimal manner.

Suggested Citation

  • Deller, Steven C. & Maher, Craig, 2005. "Government, Effectiveness, Performance and Local Property Values," Staff Papers 12638, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    • Handle: RePEc:ags:wisagr:12638
    DOI: 10.22004/ag.econ.12638
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/12638/files/stpap482.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.12638?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    2. Brueckner, Jan K., 1982. "A test for allocative efficiency in the local public sector," Journal of Public Economics, Elsevier, vol. 19(3), pages 311-331, December.
    3. Sonstelie, Jon C. & Portney, Paul R., 1980. "Gross rents and market values: Testing the implications of Tiebout's hypothesis," Journal of Urban Economics, Elsevier, vol. 7(1), pages 102-118, January.
    4. Brueckner, Jan K., 1979. "Property values, local public expenditure and economic efficiency," Journal of Public Economics, Elsevier, vol. 11(2), pages 223-245, March.
    5. Paul W. Rhode & Koleman S. Strumpf, 2003. "Assessing the Importance of Tiebout Sorting: Local Heterogeneity from 1850 to 1990," American Economic Review, American Economic Association, vol. 93(5), pages 1648-1677, December.
    6. Daniel B. Kohlhepp & Charles A. Ingene, 1979. "The Effect of Municipal Services and Local Taxes on Housing Values," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 7(3), pages 318-343, September.
    7. Taylor Lori L., 1995. "Allocative Inefficiency and Local Government," Journal of Urban Economics, Elsevier, vol. 37(2), pages 201-211, March.
    8. Bates, Laurie J. & Santerre, Rexford E., 2003. "The impact of a state mandated expenditure floor on aggregate property values," Journal of Urban Economics, Elsevier, vol. 53(3), pages 531-540, May.
    9. Brueckner, Jan K. & Joo, Man-Soo, 1991. "Voting with capitalization," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 453-467, November.
    10. Keith Dowding & Peter John & Stephen Biggs, 1994. "Tiebout : A Survey of the Empirical Literature," Urban Studies, Urban Studies Journal Limited, vol. 31(4-5), pages 767-797, May.
    11. Yinger, John, 1982. "Capitalization and the Theory of Local Public Finance," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 917-943, October.
    12. Deller, Steven C., 1990. "An application of a test for allocative efficiency in the local public sector," Regional Science and Urban Economics, Elsevier, vol. 20(3), pages 395-406, November.
    13. Oates, Wallace E, 1969. "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 77(6), pages 957-971, Nov./Dec..
    14. Wildasin, David E., 1979. "Local public goods, property values, and local public choice," Journal of Urban Economics, Elsevier, vol. 6(4), pages 521-534, October.
    15. Brueckner, Jan K., 1983. "Property value maximization and public sector efficiency," Journal of Urban Economics, Elsevier, vol. 14(1), pages 1-15, July.
    16. Henderson, J Vernon, 1980. "Community Development: The Effects of Growth and Uncertainty," American Economic Review, American Economic Association, vol. 70(5), pages 894-910, December.
    17. Henderson, J Vernon, 1985. "The Tiebout Model: Bring Back the Entrepreneurs," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 248-264, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian A. L. Hilber, 2017. "The Economic Implications of House Price Capitalization: A Synthesis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 45(2), pages 301-339, April.
    2. Sasaki, Komei, 2000. "Local public goods and their capital-gain effects," Regional Science and Urban Economics, Elsevier, vol. 30(1), pages 45-57, January.
    3. Hilber, Christian A. L., 2011. "The economics implications of house price capitalization a survey of an emerging literature," LSE Research Online Documents on Economics 58596, London School of Economics and Political Science, LSE Library.
    4. Wildasin, David E. & Wilson, John Douglas, 1996. "Imperfect mobility and local government behaviour in an overlapping-generations model," Journal of Public Economics, Elsevier, vol. 60(2), pages 177-198, May.
    5. Bates, Laurie J. & Santerre, Rexford E., 2013. "Does regionalization of local public health services influence public spending levels and allocative efficiency?," Regional Science and Urban Economics, Elsevier, vol. 43(2), pages 209-219.
    6. John P. Conley & Robert Driskill & Ping Wang, 2019. "Capitalization, decentralization, and intergenerational spillovers in a Tiebout economy with a durable public good," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 67(1), pages 1-27, February.
    7. Lisa Barrow & Cecilia Elena Rouse, 2000. "Using Market Valuation to Assess the Importance and Efficiency of Public School Spending," Econometric Society World Congress 2000 Contributed Papers 1446, Econometric Society.
    8. Brasington, David M., 2002. "Edge versus center: finding common ground in the capitalization debate," Journal of Urban Economics, Elsevier, vol. 52(3), pages 524-541, November.
    9. Barrow, Lisa & Rouse, Cecilia Elena, 2004. "Using market valuation to assess public school spending," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1747-1769, August.
    10. Barseghyan, Levon & Coate, Stephen, 2021. "Community development by public wealth accumulation," Journal of Urban Economics, Elsevier, vol. 121(C).
    11. Stephen Coate & Yanlei Ma, 2017. "Evaluating The Social Optimality Of Durable Public Good Provision Using The Housing Price Response To Public Investment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(1), pages 3-31, February.
    12. Sylvie Charlot & Sonia Paty & Michel Visalli, 2013. "Assessing the impact of local taxation on property prices: a spatial matching contribution," Applied Economics, Taylor & Francis Journals, vol. 45(9), pages 1151-1166, March.
    13. Christian A. L. Hilber & Christopher J. Mayer, 2004. "Why Do Households Without Children Support Local Public Schools?," NBER Working Papers 10804, National Bureau of Economic Research, Inc.
    14. Lang, Kevin & Jian, Tianlun, 2004. "Property taxes and property values: evidence from Proposition," Journal of Urban Economics, Elsevier, vol. 55(3), pages 439-457, May.
    15. Stephen Coate, 2013. "Evaluating Durable Public Good Provision using Housing Prices," NBER Working Papers 18767, National Bureau of Economic Research, Inc.
    16. Berardino Cesi, 2010. "Local Public Education and Childless Voting: The Arising of an “Ends with the Middle” Coalition," The IUP Journal of Public Finance, IUP Publications, vol. 0(1 & 2), pages 74-102, February .
    17. Stephanie Riegg Cellini & Fernando Ferreira & Jesse Rothstein, 2008. "The Value of School Facilities: Evidence from a Dynamic Regression Discontinuity Design," Working Papers 1104, Princeton University, School of Public and International Affairs, Education Research Section..
    18. Angela S. Bergantino & Francesco Porcelli, 2013. "Housing market prices: capitalisation of efficiency in local public service provision. An application with data on Italian urban transport related expenditures," SERIES 0047, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Aug 2013.
    19. Chang, Zheng, 2014. "Financing new metros—The Beijing metro financing sustainability study," Transport Policy, Elsevier, vol. 32(C), pages 148-155.

    More about this item

    Keywords

    Land Economics/Use;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:wisagr:12638. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/dauwius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.