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Working Paper
Municipal aid evaluation and reform
The distribution of unrestricted municipal aid has been a major policy concern in many states. Using Massachusetts as a case study, this paper examines the extent to which unrestricted municipal aid is responsive to the variation in the underlying fiscal health of municipalities. The paper uses a measure of ?municipal gap??based on local economic and social characteristics outside the direct control of local officials?to indicate the underlying fiscal health of cities and towns. The analysis finds large disparities in municipal gaps among Massachusetts cities and towns, and that those ...
Working Paper
The role of the housing market in the migration response to employment shocks
The United States is known for the ability of its residents to move to where the jobs are, and this has helped the nation maintain its position as the world?s top economy. Households? decisions to move depend not only on job prospects but also on the relative cost of housing. I investigate how the housing market affects the flow of workers across cities. This occurs through at least two channels: the relative mobility of homeowners versus renters, and the relative cost of housing across markets. I use homeownership rates to measure the former, and use an index that measures house prices ...
Working Paper
The fiscal impact of potential local option taxes in Massachusetts
This paper examines the potential impact of local-option taxes on meals, general sales, income, and payroll on revenue-raising capacity in Massachusetts municipalities. It finds that, while new local-option taxes would generate considerable additional revenues from untapped sources, revenue capacity is not evenly distributed across municipalities. Indeed, local-option taxes are likely to exacerbate fiscal disparities, because municipalities with low existing revenue-raising capacity often lack the tax bases for new local-option taxes. Policymakers could consider increasing equalizing state ...
Working Paper
The lengthening of childhood
Forty years ago, 96 percent of six-year-old children were enrolled in first grade or above. As of 2005, the figure was just 84 percent. The school attendance rate of six-year-olds has not decreased; rather, they are increasingly likely to be enrolled in kindergarten rather than first grade. This paper documents this historical shift. We show that only about a quarter of the change can be proximately explained by changes in school entry laws; the rest reflects "academic redshirting," the practice of enrolling a child in a grade lower than the one for which he is eligible. We show that the ...
Working Paper
Public-private partnerships, cooperative agreements, and the production of public services in small and rural municipalities
Using data from approximately 1,000 small and mostly rural municipalities from Illinois, New Hampshire, and Wisconsin, the authors study choices in production arrangements over a wide range of services, and examine a variety of contracting options available to local governments. The data reveal that municipalities often rely on contracts to provide an extensive list of services. ; The use of for-profit contractors and cooperative agreements with other governments correlates negatively with population. Nonetheless, small municipalities are less likely to use competitive bidding processes, ...
Working Paper
Do loans increase college access and choice?: examining the introduction of universal student loans
The returns to college are substantial, including increased earnings and public benefits, such as better health and increased involvement in public service and giving. As a result, since the introduction of the Guaranteed Student Loan program in 1965 and the Pell Grant in 1972, the federal government has experimented with using financial aid to increase college access, choice, and affordability. ; Although years of research support the notion that financial aid can influence students' post-secondary decisions, questions remain about the best ways to design such programs and the relative ...
Working Paper
Unaffordable housing and local employment growth
High housing prices have caused concerns among policy makers as well as the public in many U.S. regions. There is a general belief that unaffordable housing could drive businesses away and thus impede job growth. However, there has been little empirical evidence that supports this view. In this paper, we clarify how housing affordability is linked to employment growth and why unaffordable housing could negatively affect employment growth. We empirically measure this effect using data on California municipalities and U.S. metropolitan areas and counties. It is argued that for various reasons a ...
Working Paper
House prices and risk sharing
We show that homeowners are able to maintain a high level of consumption following job loss or disability in periods of rising house values. However, the consumption drop for consumers who simultaneously lose their job and equity in their houses is substantial. Using data from the Panel Study of Income Dynamics, we verify that homeowners smooth consumption more than renters, and that consumption smoothing improves when houses appreciate in the area of residence. We calibrate and simulate a model of endogenous homeownership and home-equity loans, and show that the model is able to reproduce ...
Working Paper
The dynamic between municipal revenue sources and the state-local relationship in New England
This working paper was written for the New England Public Policy Center?s third annual conference: ?The Dynamic between Municipal Revenue Sources and the State-Local Relationship in New England?. It relies on data from the U.S. Census to examine the dynamic between municipal revenues and the state-local relationship in New England. The analysis shows that?compared with the nation as a whole?municipal governments in New England rely very heavily on the property tax. They also have limited or no access to local-option revenues such as sales taxes, and they rely less on fees and other nontax ...
Working Paper
The challenge of energy policy in New England
New England needs a reliable supply of energy for its day-to-day functioning and its economic growth. The right mix of fuels and technologies must be in the right place at the right time, all the time. Because of the long lead times in building energy infrastructure, ensuring system reliability requires making decisions, investments, and policy today that will allow the region to meet expected demand many years from now, while at the same time buffering the region from the impact of unexpected short-term changes in energy markets. And this, in turn, requires both well-functioning markets and ...