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City competition for the creative class

Thiess Buettner () and Eckhard Janeba ()
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Thiess Buettner: University of Erlangen-Nuremberg

Authors registered in the RePEc Author Service: Thiess Büttner ()

Journal of Cultural Economics, 2016, vol. 40, issue 4, 413-451

Abstract: Abstract This paper explores the conditions under which decentralization and fiscal competition lead to a policy of providing public amenities in order to attract highly productive labor. It provides a theoretical analysis which shows that the incentive to provide such amenities is particularly strong, if institutional restrictions prevent local governments from adjusting their tax structure. The empirical analysis considers the case of Germany, where public subsidies to local theaters are shown to exert a compensating earnings differential for highly educated labor. Taking account of the institutional setting, our empirical results suggest that local jurisdictions in Germany are subject to a substantial fiscal incentive to subsidize cultural activities.

Keywords: Fiscal competition; Creative class; Cultural amenities; Theater subsidies; Tax autonomy; Capitalization; Individual earnings (search for similar items in EconPapers)
JEL-codes: H76 Z18 H41 R13 (search for similar items in EconPapers)
Date: 2016
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Working Paper: City Competition for the Creative Class (2013) Downloads
Working Paper: City Competition for the Creative Class (2013) Downloads
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Handle: RePEc:kap:jculte:v:40:y:2016:i:4:d:10.1007_s10824-015-9258-1