Local Public Good Provision: Voting, Peer Effects, and Mobility

Stephen Calabrese, Dennis Epple, Thomas Romer and Holger Sieg

No 2005-E54, GSIA Working Papers from Carnegie Mellon University, Tepper School of Business

Abstract: Few empirical strategies have been developed that investigate public provision under majority rule while taking explicit account of the constraints implied by mobility of households. The goal of this paper is to improve our understanding of voting in local communities when neighborhood quality depends on peer or neighborhood effects. We develop a new empirical approach which allows us to impose all restrictions that arise from locational equilibrium models with myopic voting simultaneously on the data generating process. We can then analyze how close myopic models come in replicating the main regularities about expenditures, taxes, sorting by income and housing observed in the data. We find that a myopic voting model that incorporates peer effects fits all dimensions of the data reasonably well.

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Related works:
Journal Article: Local public good provision: Voting, peer effects, and mobility (2006)
Working Paper: Local Public Good Provision: Voting, Peer Effects, and Mobility (2005)
Working Paper: Local Public Good Provision: Voting, Peer Effects, and Mobility (2005)
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