The Local Implications of Major Job Transformations in the City: A Spatial Microsimulation Approach

The changing dynamics of regional and local labor markets during the last decades have led to an increasing labor market segmentation and socioeconomic polarization and to a rise of income inequalities at the regional, urban, and intraurban level. These problems call for effective social and local labor market policies. However, there is also a growing need for methods and techniques capable of efficiently estimating the likely impact of social and economic change at the local level. For example, the common methodologies for estimating the impacts of large firm openings or closures operate at the regional level. The best of these models disaggregate the region to the city (Armstrong 1993; Batey and Madden 1983). This paper demonstrates how spatial microsimulation modeling techniques can be used for local labor market analysis and policy evaluation to assess these impacts (and their multiplier effects) at the local level‐to measure the effects on individuals and their neighborhood services. First, we review these traditional macroscale and mesoscale regional modeling approaches to urban and regional policy analysis and we illustrate their merits and limitations. Then, we examine the potential of spatial microsimulation modeling to create a new framework for the formulation, analysis and evaluation of social and local labor market policies at the individual or household level. Outputs from a local labor market microsimulation model for Leeds are presented. We show how first it is possible to investigate the interdependencies between individual's or households labor market attributes at the microscale and to model their accessibilities to job opportunities in different localities. From this base we show how detailed what‐if microspatial analysis can be performed to estimate the impact of major changes in the local labor market through job losses or gains, including local multiplier effects.     

Net Multipliers Avoid Exaggerating Impacts: With A Bi–Regional Illustration for the Dutch Transportation Sector

Industries often promote their interests by arguing that they have a big impact on the rest of the economy. This poses the question of how to measure the importance of an activity. To answer this, the literature often uses (regional) input–output analysis. This paper critically reviews the traditional use of multipliers in such cases. To avoid double–counting impacts and to solve related conceptual problems, the net multiplier concept is introduced. This net multiplier is illustrated empirically for the Dutch transport sector using a Type II biregional input–output model for the Netherlands.     

THE IMPACT OF LOCAL DECENTRALIZATION ON ECONOMIC GROWTH: EVIDENCE FROM U.S. COUNTIES*

ABSTRACT We analyze the impact of fiscal decentralization on U.S. county population, employment, and real income growth. Our findings suggest that government organization matters for local economic growth, but that the impacts vary by government unit and by economic indicator. We find that single‐purpose governments per square mile have a positive impact on metropolitan population and employment growth, but no significant impact on nonmetropolitan counties. In contrast, the fragmentation of general‐purpose governments per capita has a negative impact on employment and population growth in nonmetropolitan counties. Our results suggest that local government decentralization matters differently for metropolitan and nonmetropolitan counties.     

PUBLIC SECTOR UNIONISM AND TAX BURDENS: ARE THEY RELATED?*

One factor that has affected state and local politics since the 1960's is the growth of public sector unionism. Conventional wisdom assumes that the “fist generation” of public unionism has been a major cause of the fiscal problems faced by many state and local governments in the 1970's. State level cross-sectional analysis (1960–71) questions this widely held assumption with respect to the impact of strike activity and collective bargaining legislation on the tax burden across the states.     

DO FEDERAL DEFICITS MOTIVATE REGIONAL FISCAL (IM)BALANCES? EVIDENCE FOR THE SPANISH CASE

This paper studies the vertical and horizontal interactions between federal and regional governments in terms of public deficits. Recent studies commonly restraint budget slippages to the incentives created by the institutional arrangements within a country. Alternatively, we estimate here a fiscal reaction function for the Spanish regions over the period 1995–2010, paying special attention to the impact of the federal fiscal stance on regional fiscal imbalances. Our results indicate that higher public deficits for the central government encourage larger fiscal imbalances at the regional level. This vertical interaction is interpreted in the context of yardstick competition models. We also find a significant impact from fiscal decisions taken by governments at the same decision‐making tier in a specific region.     

BALANCED BUDGET MULTIPLIERS FOR SMALL OPEN REGIONS WITHIN A FEDERAL SYSTEM: EVIDENCE FROM THE SCOTTISH VARIABLE RATE OF INCOME TAX

This paper explores the impact on aggregate economic activity in a small, open region of an income tax funded expansion in public consumption that has no direct supply‐side effects. The conventional balanced budget multiplier produces an unambiguously positive macroeconomic stimulus, but the incorporation of negative competitiveness elements, through the operation of the local labor market, renders this positive outcome less certain. Simulation using a single‐region Computable General Equilibrium (CGE) model for Scotland demonstrates that the creation of local amenity effects, and the extent to which these are incorporated into local wage bargaining, is central to the analysis.     

Laissez-faire governance and the archetype laissez-faire city in the USA: exploring Houston

This article explores the governance of Houston, the archetype laissez-faire city in the USA. The research examines the complexity of Houston's minimal government intervention rhetoric, which in practice involves extensive federal, state and local government involvement in economic development in combination with a disinterest in social service and income maintenance programmes. This governance strategy is outlined through an examination both of regional public policy and local public finances. The analysis illustrates that Houston's local governance has historically been based on a management approach that attempts actively to minimize costs for potential investors to locate in the City, through public intervention, while at the same time generating an unattractive urban environment for the socially marginalized — hence the disinterest in social services. Thus, despite the local laissez-faire rhetoric, government intervention in Houston's growth has been vital and has produced the extraordinary impacts usually expected from public involvement in local economic development. The foundations of this local governance strategy are both predicted and advocated by the public choice approach, a theoretical framework whose emphasis on inter-municipal competition advances management tactics based on maintaining low taxes and low expenditures on public welfare. The research also shows, however, that Houston is unique, when compared to other economically successful US cities, in following such an extreme approach of this management strategy.     

LOCAL PUBLIC EMPLOYEE UNIONIZATION: TRENDS AND IMPLICATIONS FOR THE FUTURE

In this article, some of the important structural changes occurring in local government today which are likely to have a direct impact on labor relations for municipal and county governments are reviewed. These include fiscal, managerial and socio-economic changes. The implication of these changes for such factors as multilateral bargaining, union growth, contracting out, inter-municipal labor cooperation, legitimacy for public employee unionization, popular support, and changes in the legal status of organized municipal employees are examined. Finally, the overall impact of these trends on work stoppages, disruption of city services, etc. is discussed.     

Second‐Order Devolution and Administrative Exclusion in the Temporary Assistance for Needy Families Program

With the passage of welfare reform in 1996, state and local governments gained substantial authority to design and implement their own welfare programs. Proponents of devolution asserted that, under devolution, local governments would be better able to tailor program administration to meet local economic needs. However, opponents contended devolution could lead to local governments seeking to control costs by limiting access to welfare. Meanwhile, existing research suggests that economics will not play an important role in determining welfare provision. This article investigates these competing claims by assessing the relationship between economic conditions and administrative exclusion, which is making programs so hard to access that potential and current recipients decide to forgo benefits, in a state that gives counties significant authority over welfare provision. To do so, I assess whether county application denial, sanctioning, and case closure rates are influenced by changes in local economic characteristics. I find that, even during periods of substantial economic distress, county practices related to administrative exclusion are largely unresponsive to changes in unemployment, child poverty, and fiscal constraints. These findings call into question the responsiveness of the devolved social safety net for poor families.     

Do Australians want the welfare state?

The failures of the Australian welfare state are often implicitly argued to derive in large part from the conservatism of the Australian public. This research uses public opinion poll data from 1940 to 1985 to question some of the claims made about public opinion and Australian welfare. These data indicate that post‐World War Two governments were not the captives of public opposition to expanded welfare provision. The public favoured generous, universal and contributory welfare provision in specific areas where the policies of successive Australian governments favoured selective, illiberal welfare measures funded by taxation. Moreover, public support for government health schemes suggests that welfare programmes generate public support rather than result from it.

This evidence suggests that explanations for the conservatism of the Australian welfare state lie elsewhere.     

Scaling‐Up,Scaling‐Down,and Scaling‐Out: Local Planning Strategies for Sea‐Level Rise in New South Wales,Australia

Globally, sea‐level rise is expected to impact on many coastal regions and settlements. While mitigation of global greenhouse gas emissions remains an important task, adaptation is now seen as a critical component of the policy equation. Local government is a key player in adaptation planning and managing risk through their mandated role in land use planning and development control. Yet, managing the predicted impacts of climate change is proving to be a complex and difficult task for planners and policy makers. This paper reports on a case of local government deliberation on possible planning responses to address future sea‐level rise impacts in New South Wales, Australia. Using structured, expert opinion of planners and other technical experts engaged in a collaborative network in the Sydney region, we explore the feasibility of implementing planning and policy measures at the local and regional scales to respond to inundation risk as a result of sea‐level rise and storm surge events. Our research shows how local governments employ specific scale‐oriented strategies to engage private and public actors at different scales to manage legal, financial, and technical risks in coastal adaptation.     

THE MARKET VALUE OF ENVIRONMENTAL IMPROVEMENTS IN ALTERNATIVE FISCAL REGIMES*

ABSTRACT Land price differentials have long been used as a proxy for the value of environmental improvements in cost/benefit analysis. Both the empirical and theoretical literatures have largely ignored two important facts, however: Taxes financing local improvements are often distortionary, and amenities which influence property values in turn impact the fiscal budget, and hence the tax rate and final economic burden. Put another way, the economic cost of an improvement is endogenous to both the amenity level and the revenue structure. Extending the story in this direction for a system of open or closed spatial cities, the paper finds land rent measures to be a biased measure of the willingness to pay for amenities financed by either head taxes (benefit taxes), property taxes (excise taxes), or highway tolls (user fees). These results are used to correct the conventional specification of empirical property value regression models, which traditionally account for neither tax revenue effects nor the excess burden of distortionary taxation.     

IMPACT OF POPULATION AGEING ON INDIA'S PUBLIC FINANCE

This paper integrates the methodology of the National Transfer Accounts and Budget Forecasting Model to compute and forecast the impact of population ageing on India's public finance from 2005 through 2050, based on the fiscal structure in 2004–2005. The empirical results are new and have useful policy implications. The forecasted increase in the share of total public expenditure on elderly individuals is largely accounted for by expenditure on civilian pensions and other cash transfers, government services, and poverty and other social protection. Elderly individuals are found to be not very expensive in terms of public health expenditure. Tax revenues increase and result in a decline of debt-to-GDP ratio because population ageing does not lower tax buoyancy in the long run. Overall, the increasing total budget surplus and fiscal support ratio implies that the long-term impact of population ageing may be fiscally sustainable.     

Tradeoffs between Local Taxes and Government Spending as Determinants of Business Location*

Abstract. This paper investigates the effects of local fiscal policy on the location decisions of 3,763 establishments that began operations in Maine between 1993 and 1995. Empirical results, estimated from Poisson and negative binomial regression models, indicate that businesses favor municipalities that spend high amounts on public goods and services, even when these expenditures are financed by an increase in local taxes. This suggests that a local fiscal policy of reduced government spending, to balance a tax cut, may attract fewer new businesses than a policy featuring additional spending and higher taxes.     

SPATIAL HEDONICS AND THE WILLINGNESS TO PAY FOR RESIDENTIAL AMENITIES*

ABSTRACT We investigate the role of spatial multipliers when using spatial‐lag hedonic models to measure the benefits of residential amenity improvements. Such benefits are commonly measured using the product of the coefficient of the amenity in question and a spatial multiplier. We show this is correct only when the spatial spillovers transmitted through the multiplier are strictly technological. If they are instead strictly pecuniary, then benefits are fully measured using the coefficient with no spatial multiplier. In either case, or in intermediate cases where both types of spillovers exist, a spatial‐lag specification is required to obtain valid benefits measures.     

How to improve the quality of life in peripheral and lagging regions by policy measures? Examining the effects of two different policies in Germany

Peripheral regions commonly appear to be less attractive to live in and policymakers all over the world are applying various measures to make them more attractive. This paper analyzes the effects of two very different measures: The German municipal fiscal equalization scheme and the German structural funds for economically weak areas (GRW). It focusses on the impact on perceived quality of life, measured through interregional migration between German labor market regions. Using a spatial vector autoregressive panel model, we find evidence that equalization transfers have a significant positive impact on regional net migration and contribute to the aim of regional equity. These effects are especially found for regions with low endogenous fiscal capacities. GRW funding reveals no significant effects on net migration rates in total, but short-term effects in rural regions.     

IMPACT FEES: SOME FUNDAMENTAL ISSUES

Impact fees are an increasingly popular way for local governments to raise money for new capital facilities. The legal basis for the imposition of these fees, however, is unsettled. This paper considers some of the fundamental questions that must be resolved concerning the legality of impact fees. The paper concludes that in many instances such fees are unauthorized taxes, not fees incident to the regulatory power local governments possess under the police power. The paper suggests that impact fees should play only a limited role in meeting the fiscal obligations of local governments.     

State Expenditures and Policy Outcomes in Environmental Program Management

Comparative state environmental research seeks to explain the factors contributing to intergovernmental environmental management. In pursuing the answer to this query, researchers have relied on either fiscal (expenditures) or nonfiscal (ranking) measures of state environmental effort. Respecting the debate surrounding state policy outputs and fiscal versus nonfiscal measures, we evaluate comprehensive state environmental management comparing spending and ranking measures in our analysis. Though pronounced differences do exist between the two models, we find pollution and state size to be the primary factors affecting a state's environmental effort no matter which measure is used.     

TAX COMPETITION IN THE PRESENCE OF INTERJURISDICTIONAL EXTERNALITIES: THE CASE OF CRIME PREVENTION*

ABSTRACT The paper analyzes the effect of fiscal competition when local governments choose the level of public goods that generate spillover effects elsewhere. For instance, law enforcement activities affect both the crime level in the jurisdiction providing the good and in neighboring communities. The model shows that when local governments rely on capital taxation to finance these expenditures the spillover effects may not lead to an inefficient provision of public goods as predicted by the tax competition literature. In the model, capital is costlessly mobile and offenders relocate responding to differential criminal opportunities and differential local law enforcement efforts.     

Mexican Public Sector Food Policy Under Agricultural Trade Liberalization

Mexico has enjoyed one of the Third World's most successful food production systems, based on a complex pattern of public sector intervention. Since 1982, the public sector has withdrawn, in a remarkably Steadfast commitment to privatization, external stabilization, and trade liberalization. This article traces the key elements of that process, and their likely impacts on traditional political goals of food security progressive social policy in the countryside, and external sector dependence. The principal argument is that privatization and trade liberalization leave poor agriculturalists vulnerable, but undoubtebly offer fiscal gains to the state and benefits to urban consumers, especially in light of reduced subsidies.