Date of Award

August 2016

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Public Administration

Advisor(s)

John Yinger

Keywords

hedonic model, local government studies, school district consolidation, special district, state and local public finance, village dissolution

Subject Categories

Social and Behavioral Sciences

Abstract

This dissertation, comprised of three essays, explains and evaluates local government structural changes from a public finance perspective. The first essay examines the determinants of the rapid growth of special districts, while the next two essays estimate the effects on property values of school district consolidation and village dissolution in New York State, respectively. Together, the three essays contribute to our understanding of the causes and consequences of local government structural changes in the United States.

By bring together two central trends in state and local public finance, namely, the expansion of state-imposed tax and expenditure limitations (TELs) and the rapid growth of special districts, the first essay looks into the hypothesis that TELs are partly responsible for the increase of special districts over the last several decades. To eliminate the possible omitted variable bias, I employ a combination of fixed effects, regional time trends and approximate measures of fiscal conservativeness. Based on a national data set of counties over the period 1972-2007, I find TELs, on average, increase the use of special districts (circumvention effects), whereas TELs don’t force local governments to cut their intergovernmental fiscal transfer to special districts in the same county area (deterrent effects). The estimation results are robust to multiple tests of common trends assumptions, five alternative measures of TELs, alternative model specifications and different empirical strategies. This results confirm the theory that special districts have been extensively created by local general-purpose governments as an institutional strategy to circumvent the fiscal constraints imposed by TELs.

The second essay explores the impacts of school district consolidation on property values in upstate New York from 2000 to 2012. This research, conducted in collaboration with Professors William Duncombe and John Yinger, adds a time dimension to research on the property-value impacts of consolidation. By combining propensity score matching and double-sales data to compare house value changes in consolidating and comparable school districts, we find that it takes time either for the advantages of consolidation to be apparent to homebuyers or for the people who prefer consolidated districts to move in. In addition, the long-run impacts of consolidation on house values are positive in low-income census tracts but negative in high-income census tracts. This result suggests that high-income households are particularly attached to the benefits, such as close contact with teachers, of small districts.

Streams of institutional, economic and fiscal factors recently have been converging and substantially changing the landscape of local government in the United States. Dissolution, an old and new approach, has increasingly been used and therefore drawn much public attention nowadays. The third essay provides the first study investigating whether village dissolution, as a form of general-purpose government reorganization, affects the attractiveness of local communities. In New York, voters in several villages voted to dissolve the village and hence to shift all government services to the town government in which the village is located. I show that village dissolution does not alter the amount people are willing to pay inside the (eliminated) village boundaries, but that the price of housing declines in areas of the town outside the village (TOV). Presumably, residents in the TOV areas are upset with the negative externalities of village dissolution.

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