A comparative analysis of the output measures of local public services

Summary and conclusion This study examines the robustness of the expenditure levels specification of the local government services. An alternative benefit specification is developed in which the expenditure levels of the education services and public safety provisions are replaced by the "benefits" of these services. Comparison of the regression results of these alternative specifications indicates that the output specification of the local services yields unexpected signs on the coefficients of some of the services. However, the coefficient on the effective tax rate in the output regression is very similar to that in the expenditure one.     

Incorporating contextual information in public sector efficiency analyses: a comparative study of NSW local government

Using the planning and regulatory function of 173 NSW local governments, several approaches for incorporating contextual or non-discretionary inputs in data envelopment analysis (DEA) are compared. Non-discretionary inputs (or factors beyond managerial control) in this context include the population growth rate and distribution, the level of development and non-residential building activity, and the proportion of the population from a non-English speaking background. The approaches selected to incorporate these variables include discretionary inputs only, non-discretionary and discretionary inputs treated alike and differently, categorical inputs, ‘adjusted’ DEA, and ‘endogenous’ DEA. The results indicate that the efficiency scores of the five approaches that incorporated non-discretionary factors were significantly positively correlated. However, it was also established that the distributions of the efficiency scores and the number of councils assessed as perfectly technically efficient in the six approaches also varied significantly across the sample.     

Corruption in public service delivery: An experimental analysis

To improve our understanding of corruption in service delivery, we use a newly designed game that allows us to investigate the effects of the institutional environment on the behavior of service providers and their monitors. We focus on the effect of four different factors: whether monitors are accountable to the service recipients, the degree of observability of service providers’ effort, the providers’ wages and the providers’ professional norms. In accordance with theory, we find that service providers perform better when monitors are elected by service recipients and when their effort is more easily observed. However, there is only weak evidence that service providers perform better when paid more. Monitors are more vigilant when elected and when service providers are paid more. Playing the game with Ethiopian nursing students, we also find that those with greater exposure to the Ethiopian public health sector perform less well, either as provider or as monitor, when the experiment is framed as a public health provision scenario, suggesting that experience and norms affect behavior.     

Interregional infrastructure,competition for capital,and local public expenditure policies: Evidence from China's high-speed rail network

Interregional infrastructure promotes market integration and enhances the mobility of capital, thereby intensifying fiscal competition among local governments. Exploiting the expansion of China's high-speed rail (HSR) network as plausibly exogenous shocks, this study examines how Interregional infrastructure affects the fiscal competition among local governments. We find that after connecting with the HSR network, city governments tend to dedicate a lower proportion of public spending to consumption goods, which benefit immobile households, and invest more in productive inputs, which attract mobile firms. We also find that the negative effect of HSR connection on the proportion of consumption goods is more pronounced in peripheral cities than core cities because periphery cities face a larger increase in capital mobility due to the core–periphery effects of trade integration induced by HSR. Our findings indicate that the behavioural responses of local governments should be accounted for when assessing the social welfare of interregional infrastructure.     

Volunteering a public service: an experimental investigation

In some public goods environments it may be advantageous for heterogeneous groups to be coordinated by a single individual. This “volunteer” will bear private costs for acting as the leader while enabling each member of the group to achieve maximum potential gains. This environment is modeled as a War of Attrition game in which everyone can wait for someone else to volunteer. Since these games generally have multiple Nash equilibria but a unique subgame-perfect equilibrium, we tested experimentally the predictive power of the subgame-perfection criterion. Our data contradict that subjects saw the subgame-perfect strategy combination as the obvious way to play the game. An alternative behavioral hypothesis—that subjects were unable to predict accurately how their opponents would play and tried to maximize their expected payoff—is proposed. This hypothesis fits the observed data generally well.     

Unidirectional transshipment policies in a dual-channel supply chain

The main purpose of this paper is to study the ordering, transshipment price, wholesale price and contracting decisions of a dual-channel supply chain with unidirectional transshipment. We establish a dual-channel model which consists of a manufacturer, an online shop owned by a manufacturer and a retailer. We first examine the ordering decisions and establish the existence of the pure strategy Nash equilibrium. Then we study other decisions under two types of transshipment price setting: exogenous and endogenous. Under exogenous transshipment price, we investigate the wholesale price decisions of the manufacturer. And then we find that the transshipment strategy with wholesale price contract can coordinate the supply chain only under a certain condition and cannot accommodate arbitrary divisions of the profit. So we further develop an all-unit quantity discount contract to coordinate the supply chain and achieve win–win outcome. Under endogenous transshipment price, we use Generalized Nash Bargaining Solution to study the transshipment price decisions and obtain a transshipment price mechanism. We find that the transshipment price mechanism always coordinates the supply chain.     

A comparative analysis of funding schemes for public infrastructure spending in Quebec

The economic literature has been investigating the positive relation between public infrastructure spending and the productivity of the private sector since Munnell (1992). We have introduced this relationship into a recursive dynamic computable general equilibrium model of the Quebec economy to investigate various funding schemes to scale up infrastructure spending in the province. We draw our assumptions from Estache et al. (2010) combined with sectoral elasticity parameters. We conduct a comparative analysis where the funding comes from debt alone, and debt with sales tax, income tax and business tax. Our main finding is that the income tax seems to produce the most positive effects and the businesses tax the most negative effects, though differences are small.     

Endogenous (re-)distributive policies and economic growth: A comparative static analysis

This paper analyzes the interplay of economic growth, (re-)distribution and policies when the latter are set exogenously or when they depend on economically important fundamentals. A redistribution policy generally causes lower growth, but less so when economic efficiency is higher. The model implies that high (endogenous) tax rates may not necessarily imply low growth. The paper shows that the long-run cross-country relationship between growth and endogenous policy is generally not clear-cut. But it is shown that this relies on conditions that can be used for identification in empirical research. The paper also argues that in the long run workers benefit more from higher efficiency than capital owners, even though inequality might and growth would rise.     

Educational supply policies: distortions and labor market performance

Journal of Economics - Is it always worth implementing an open enrollment policy? And implementing policies that pursue equity in school supply? What is the impact of these two policies on the...     

Evolution in mechanisms for public projects

Summary This paper considers the explicit, real time dynamic processes in which cooperation emerges in a class ofbinary decision mechanisms, each of which determines funding for a public project. This class includes the Voluntary Contribution and the Majority Voting mechanisms. The population is subject to turnover so that new individuals enter society with possibly different beliefs about the future evolution of societal behavior than their predecessors. Individuals in this society maximize their discounted expected utilities. Due to the frequent turnover, however, these expectations may not be mutually consistent. Nevertheless, we find, for each mechanism, the nonempty set of the parameters for which the behavior pattern starting from states with nonprovision is absorbed into states with full provision with probability one. Moreover, for a sufficiently large population, outcomes with full provision are absorbing states if and only if certain types of voting mechanisms are used.We wish to thank an anonymous referee for valuable comments. We have also benefitted from the helpful comments of Srihari Ghovindan, Peter Linhart, George Mailath, Stephen Morris, Roy Radner, Rafael Rob, Nicholas Yannelis, and numerous seminar participants.     

Illegal immigration: a supply side analysis

"This paper analyzes the supply-side determinants of illegal immigration using a three-sector general equilibrium model of the source country. Agricultural liberalization raises illegal immigration while liberalization of the high tech sector reduces it. In contrast, capital mobility in the source country renders trade policy ineffective for controlling illegal immigration. Paradoxically, increased enforcement (by the host country) may raise source country unskilled wages, although illegal immigration falls. Finally, under capital mobility, a rise in the source country restrictions on capital inflow raises the level of illegal immigration and reduces the effectiveness of border enforcement efforts by the host country."     

Preferences and demand for local public spending

In this paper we present logit estimation results for individual demand equations for local public spending. Our data are derived from a large-scale survey, organized by a Belgian municipality. Respondents were informed that the results of the survey would influence actual decisions and the questions covered very specific projects and their immediate tax consequences. Sociological variables are dominant in the explanation of the willingness-to-pay for specific projects, while the explanatory value of income is limited. We also analyse the global choice between public and private spending: here income and education are the most important variables, and both have a positive effect on the demand for public spending. Fiscal ignorance is widespread but does not lead to a higher demand for public spending.     

Layoff taxes and minimum wage: Two complementary public policies

In a matching model in which the job destruction rate and the output are endogenous, we show that the presence of a binding minimum wage prompts firms to choose too risky jobs. Introducing layoff taxes therefore reduces unemployment and improves market efficiency.     

A comparative analysis of the voting behavior of constituents and their representatives for public debts

We explore the quality of political representation of constituents?? preferences for budgetary decisions within a quasi-experimental setting. In the Swiss referendum process, constituents reveal their preferences for budgetary proposals which are either expected to increase or decrease public debts. We match individual politicians?? voting behavior on debt increasing and debt reducing legislative proposals with eight real referendum decisions on exactly the same issues from 2008 to 2011. Thereby, we directly explore deviations of politicians from constituents?? preferences with respect to budgetary policies.     

Any need for coordination of policies towards transit traffic with a negative local externality?

International transit traffic between countries can be expected to increase in the future. This paper investigates whether international policy coordination is appropriate in the case of international transit traffic causing a local environmental externality. This issue is analysed in a two-country model where traffic is used as an input in production. It is found that individual optimization of the countries is likely to result in an outcome with less than optimal international traffic, i.e. too little pollution compared with optimum.