Evaluating the Efficiency and Equity of Federal Fiscal Equalization

In theory, federal transfers that make household location decisions efficient should ignore local cost differences, subsidize positive externalities, and offset differences in federal-tax payments and local taxes levied on non-residents, but not local tax revenues from residents. Transfers that redistribute resources equitably across regions will likely target areas with individuals of low earnings potential or low real incomes. Applying these criteria empirically, Canadian equalization policy appears neither efficient nor equitable, but exacerbates pre-existing inefficiencies and underfunds minorities. Locational inefficiencies cost Canada 0.41 percent of income annually and cause over-funded provinces to have populations 31 percent beyond their efficient long-run levels. The hard copy version of this paper was accidentally printed without tables. Print subscribers may access the full file by downloading here. Individual purchasers of paper copies can email [email protected] for the full file. Our apologies for the error.

Are Houses Too Big or In the Wrong Place? Tax Benefits to Housing and Inefficiencies in Location and Consumption

Tax benefits to owner-occupied housing provide incentives to consume housing, offsetting weaker disincentives of the property tax. These benefits also help counter the penalty federal taxes impose on households who work in productive high-wage areas, but reinforce incentives to consume local amenities. We simulate the effects of these benefits in a parameterized model, and determine the consequences of various tax reforms. Reductions in housing tax benefits generally increase efficiency in consumption, but reduce efficiency in location decisions, unless they are accompanied by tax rate reductions. The most efficient policy would eliminate most tax benefits to housing and index taxes to local wage levels

What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values

An equilibrium model predicts that inter-city differences in firm productivity, and the full value of local amenities cannot be inferred without land values. These may be inferred from ordinary wage and housing-cost data using the housing-cost function if housing-sector productivity is constant. A calibrated model predicts how quality-of-life and production amenities are capitalized differently into land values, wages, housing costs, and federal-tax payments. The total value of these amenities are estimated across U.S. cities. Wages and housing costs are driven more by productivity than quality-of-life differences. The most productive and valuable cities are typically coastal, sunny, mild, educated and large.

Partisan Representation in Congress and the Geographic Distribution of Federal Funds

In a two-party legislature, districts represented by the majority may receive greater funds if majority-party legislators have greater proposal power or disproportionately form coalitions with each other. Funding types received by districts may depend on their legislators’ party-identity when party preferences differ. Estimates from the United States – using fixed-effect and regression-discontinuity designs – indicate that states represented by members of Congress in the majority receive greater federal grants, especially in transportation, and defense spending. States represented by Republicans receive more for defense and transportation than those represented by Democrats; the latter receive more spending for education and urban development.

Quality of Life, Firm Productivity, and the Value of Amenities across Canadian Cities

This paper presents the first hedonic general-equilibrium estimates of quality-of-life and firm productivity differences across Canadian cities, using data on local wages and housing costs. These estimates account for the unobservability of land rents and geographic differences in federal and provincial tax burdens. Quality of life estimates are generally higher in Canada’s larger cities: Victoria, Vancouver are the nicest overall, particularly for Anglophones, while Montreal and Ottawa are the nicest for Francophones. These estimates are positively correlated with estimates in the popular literature and may be explained by differences in climate. Toronto is Canada’s most productive city; Vancouver, the overall most valued city.quality of life, firm productivity, cost-of-living, firm productivity, compensating wage differentials

Climate amenities, climate change, and American quality of life

We present a hedonic framework to estimate U.S. households' preferences over local climates, using detailed weather and 2000 Census data. We find that Americans favor an average daily temperature of 65 degrees Fahrenheit, will pay more on the margin to avoid excess heat than cold, and are not substantially more averse to extremes than to temperatures that are merely uncomfortable. These preferences vary by location due to sorting or adaptation. Changes in climate amenities under business-as-usual predictions imply annual welfare losses of 1 to 3 percent of income by 2100, holding technology and preferences constant

Responses of coral reef fishes to past climate changes are related to life‐history traits

Coral reefs and their associated fauna are largely impacted by ongoing climate change. Unravelling species responses to past climatic variations might provide clues on the consequence of ongoing changes. Here, we tested the relationship between changes in sea surface temperature and sea levels during the Quaternary and present-day distributions of coral reef fish species. We investigated whether species- specific responses are associated with life-history traits. We collected a database of coral reef fish distribution together with life-history traits for the Indo-Pacific Ocean. We ran species distribution models (SDMs) on 3,725 tropical reef fish species using contemporary environmental factors together with a variable describing isolation from stable coral reef areas during the Quaternary. We quantified the variance explained independently by isolation from stable areas in the SDMs and related it to a set of species traits including body size and mobility. The variance purely explained by isolation from stable coral reef areas on the distribution of extant coral reef fish species largely varied across species. We observed a triangular relationship between the contribution of isolation from stable areas in the SDMs and body size. Species, whose distribution is more associated with historical changes, occurred predominantly in the Indo-Australian archipelago, where the mean size of fish assemblages is the lowest. Our results suggest that the legacy of habitat changes of the Quaternary is still detectable in the extant distribution of many fish species, especially those with small body size and the most sedentary. Because they were the least able to colonize distant habitats in the past, fish species with smaller body size might have the most pronounced lags in tracking ongoing climate change

Causes and Consequences of Unequal Federal Taxation and Spending Across Regions: Dissertation Summary

Most national governments exercise sovereignty over large geographic areas, comprising a multitude of economically diverse cities and politically heterogeneous regions. Unlike local governments, which typically must spend revenues in the same area in which they are raised, national governments face no such constraints and can effectively redistribute funds from one area to another by letting some areas receive more spending, net of taxes, than others. While an enormous literature has studied the causes and consequences of taxation and spending at the purely national and purely local levels, surprisingly little research has examined how or why national governments may tax and spend differently across different areas

Lectures on Urban Economics by Jan K. Brueckner

Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/92400/1/j.1467-9787.2012.00780_4.x.pd