Title

Estimates Of Relative Fiscal Burdens And The Influence Of The Composition Of The Property Tax Base On The Demand For Education In New York State School Districts

Date of Award

1981

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

Advisor(s)

Jerry Miner

Keywords

Finance

Subject Categories

Economics

Abstract

This research is concerned with three related issues: the stability of price elasticities of demand for education when the composition of a school district's property tax base is interpreted as a price; inferences about which types of local property reduce the local tax price for education; and, whether or not inordinate local noneducation public service needs reduce or impair the ability of New York State school districts to finance education.

Price elasticities of demand for education which view the composition of the property tax base as an indicator of price appear to be quite stable. Several results support this proposition. Price elasticities of demand for New York State school districts are similar to those reported in other studies and are concentrated within the interval -.3 to -.78, depending on which version of the demand equation was examined. Price elasticities do not appear to be sensitive to the functional form imposed during estimation. Elasticities of demand in a Stone-Geary model of demand were similar to elasticities from linear models of demand. Furthermore, Box-Cox estimation of the functional form of demand reveals that elasticities of demand for education are constant for a wide range of price changes.

Research on the second issue examined in this study--which types of property reduce local tax price for education--revealed that industrial property had a consistently greater impact than commercial property in lowering tax price. A partial explanation for the inconsistency of these results and those of prior studies is a strong correlation between tax base composition and intergovernmental grants in New York State.

No evidence to support the relative fiscal burden hypothesis was discovered in this research. The relative burden hypothesis, the third issue studies, posits that unusually high noneducation local public service demands, in some school districts, impair the ability of these school districts to finance education. To test this hypothesis two estimates of needs for noneducation local public services were included in a demand equation for local education. One estimate of needs was derived by estimating how local noneducation revenues per capita vary in response to demographic variables in a linear demand equation. The second estimate used a Stone-Geary model to estimate minimum needs for noneducation local public services. Neither of the two estimates had a significant effect on the demand for local education.

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