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Demand for new cities: Property value capitalization of municipal incorporation

Carlianne Patrick and Christopher Mothorpe

Regional Science and Urban Economics, 2017, vol. 67, issue C, 78-89

Abstract: This paper investigates property value capitalization of municipal incorporation. Using detailed data from the metropolitan Atlanta area, our empirical strategy combines difference-in-differences hedonics with a relatively underutilized matching method from the class of monotonic imbalance bounding methods that approximates a fully blocked randomized experiment. We find that new city formation is positively capitalized into property values within the new city, increasing 4–5% in the two years following new city formation compared to the two years prior and 12–13% over the entire analysis period. The results also indicate that capitalization is stronger for parcels with greater potential for redistribution.

Keywords: H73; R21; R31; Municipal incorporation; Property taxation; Decentralization; Endogenous political jurisdiction formation; Hedonic difference-in-differences (search for similar items in EconPapers)
Date: 2017
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