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Local Fiscal Policies and Urban Wage Structures

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Abstract

It has long been recognized that average wages vary strikingly across regions and urban areas, in part due to differences in local amenities and fiscal policies. However, analogous differences in wage dispersion remain relatively unexplored. We develop a model suggesting that, after accounting for individual characteristics, wage dispersion across income groups should reflect differences in the relative valuation of local amenities and fiscal policies. We empirically investigate whether there is a link between local taxes and expenditures and the degree of dispersion in the wage structure, and find evidence that such a relationship exists.

Suggested Citation

  • Patricia Beeson & Tara Watson & Lara Shore-Sheppard, 2010. "Local Fiscal Policies and Urban Wage Structures," Department of Economics Working Papers 2010-05, Department of Economics, Williams College.
    • Handle: RePEc:wil:wileco:2010-05
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    File URL: https://web.williams.edu/Economics/wp/BeesonShoreSheppardWatsonLocalFiscalPolicies.pdf
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    More about this item

    Keywords

    inequality; wage distributions; local expenditures; local taxes;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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