Population Movements in the Presence of Agglomeration and Congestion Effects: Local Policy and the Social Optimum

Peter Mueser, David Mandy () and Eric Parsons ()

No 1123, Working Papers from Department of Economics, University of Missouri

Abstract: We investigate the efficiency properties of population mobility when localities compete in an environment with local amenities and local externalities. Our model is dynamic, incorporating land and labor markets in a context where firms and workers form rational expectations. Concern focuses on whether and under what conditions the substantive conclusions from static models can be reinterpreted to apply in a dynamic context where moving is costly. In the spirit of Tiebout (1956), it can be shown in a static model that taxes or subsidies developed by each local jurisdiction representing the interests of landowners can induce an efficient population allocation even in the presence of local externalities. We show that, in a dynamic model, efficiency of mobility requires that localities represent the interests of other local stakeholders, including residents and firms, as well as landowners. Under certain circumstances, the dynamic model resolves problems of indeterminacy implicit in the static model due to multiple equilibria. On the other hand, we also find that there may be multiple sets of equilibrium flows corresponding with alternative expectations. We consider institutional arrangements that may facilitate preferred paths.

Keywords: Local taxation; Population externalities; Migration (search for similar items in EconPapers)
JEL-codes: H23 J61 R13 R5 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2011-10-15
Note: Substantial update of WP08-02
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://drive.google.com/file/d/1yp4Obgh-pH1imn1RT ... 0Bu/view?usp=sharing (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:umc:wpaper:1123

Access Statistics for this paper

More papers in Working Papers from Department of Economics, University of Missouri Contact information at EDIRC.
Bibliographic data for series maintained by Chao Gu ().