Browsing by Subject "Public Economics"

This thesis focuses on multiple themes in the field of public economics with intersectionsin development economics, environmental economics, and political economy. The overarching themes of this work are focuses on the city, institutions, and economic and environmental justice. The first chapter examines on the impact of lead abatement laws on eviction. The second chapter evaluates Myanmar’s National Community Driven Development Program. The final chapter examines the role of one’s representative on their home’s price. An abstract of each chapter is as follows:

Lead paint in old houses is the leading cause of leadpoisoning in children under 6 today. To combat this problem, several states have passed lead abatement laws, forcing landlords to remove lead in the homes they rent if tenants have children under the age of 6. However, these laws have unintended consequences, causing landlords to evict tenants rather than abate lead. I use a difference-in-differences approach while employing various model specifications with various fixed effects and sets of controls to examine the impact of Ohio’s 2003 lead abatement law on eviction rates. Using newly collected data from the Eviction Lab at Princeton University, I find that the passage of Ohio’s lead abatement law sharply increased targeted evictions. Due to the law’s passage, the average census district in Ohio faced an increased eviction rate of roughly 0.457 points, corresponding to an additional 13.93 evictions a year. These impacts are highly statistically significant, sizeable, and economically meaningful, indicating that policy makers should incorporate distributional consequences when designing future lead abatement laws in order to avoid unintended consequences and ensure equitable outcomes.

Community driven development (CDD) has become acommon method of distributing aid throughout the developing world. Founded on two guiding principles, decentralization of the aid distribution process and empowerment through participation, CDD programs encourage community involvement in all steps of the development project. We evaluate Myanmar’s National Community Driven Development Program (NCDDP) by implementing a regression discontinuity design in sampling that takes advantage of the discontinuous cutoff in program receipt at the township border by sampling matched pairs of villages across program borders. We find that CDD successfully delivers village infrastructure, in line with the results of previous CDD evaluations. Moreover, in contrast to previous findings in the literature, we find large positive effects of CDD enrollment on the diversity and quality of local governance structures and greater participation of women and ethnic minorities. Finally, we provide novel evidence that these changes in local governance are associated with detectable improvements in local public goods provision beyond the scope of the CDD program, as measured by village-level responses to the Covid-19 pandemic. In particular, CDD villages enact more significantly more of the recommended measures to contain the spread of disease. These results provide evidence that CDD participation Congressional and state representatives and their parties use their political power to send kickbacks to their districts, providing funding for public goods and targeted investment within their district. However, representatives do not have an equal ability to do this, as those with longer tenure, important committee posts, and in more competitive districts have the ability to send more kickbacks to their districts. I estimate the impact of one's representative and district, at the state house, state senate, and congressional level, on housing prices using the 2010 redistricting to identify the impact of one's representative on housing prices. I first develop a model of political competition and housing prices with testable implications to bring to the data. Using data from InfoUSA, containing roughly 130 million housing transactions per year, from 2006 to 2014, combined with data on state and federal representatives, I identify and examine the impact of one's representative on housing prices using multiple methods, including location fixed effects, a regression discontinuity design, and an instrumental variables design. I find that "packing" districts so that they are not competitive is not only used to dilute voting power, but dilute local wealth as well, that more powerful representatives use that power to increase the value of their constituents' homes, and that representatives in the party in control of the respective house are able to use this power to send kickbacks to their constituents. Not only does partisan gerrymandering come at a social and political cost, but a great economic cost as well.

This dissertation addresses three interrelated questions regarding the markets through which governments raise funds. Public entities around the world commonly raise revenue by levying taxes or by selling bonds. I examine aspects of both mechanisms in the US context as well as their interaction. Focusing on how public financial decisions affect private markets in the US, I examine (1) the process by which municipal bonds are created and sold, (2) how tax treatment of municipal bond income affects the underwriting process, and (3) how corporate tax incentives change worker outcomes.

Like in many financial markets, the governments issuing municipal bonds often don't have the expertise to accurately construct debt packages, price individual bonds, or place bonds with final investors. To interact with the market, municipalities often hire two types of intermediaries: financial advisors and underwriters. The financial advisors structure a bond package while the underwriters buy these bonds from municipalities and sell them to investors. The second chapter examines a policy change from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that requires these two distinct roles are filled by different firms. To determine if allowing both underwriter and advisor to be the same firm distorts outcomes, I use a difference in differences approach to measure bond outcomes for municipalities who hired different types of advisors before and after the Dodd-Frank regulation. I find bonds sold with an advisor who could also be an underwriter experience a decrease in interest costs after the advisor is no longer allowed to underwrite. The improvement in outcomes from the municipality's perspective is driven in part by a large increase in competition from non-advisor underwriters that more than offsets missing competition from the advisor--consistent with the partial resolution of a winner's curse.

The third chapter also sheds light on how the imperfect competition in the underwriting market for municipal bonds affects borrowing outcomes. Most municipal bonds sold in the US pay interest that is exempt from personal income taxation at federal and state levels. This personal income tax exemption is contentious because, in isolation, it primarily benefits individuals paying top marginal tax rates. Using variation in federal taxes, state taxes, and their interaction from 2008 to 2015, I first show that increases in taxes are associated with surprisingly large decreases in borrowing costs for municipalities. This fact motivates the estimation of an empirical auction model with conditionally independent private values that features endogenous entry of potential bidders, endogenous entry into an auction stage, and unobserved heterogeneity across auctions. The model shows that very large elasticities of markups drive larger than unity passthrough from the tax advantages to municipal borrowing costs on average. The model is used to estimate counterfactual tax regimes and highlights how changes in federal tax rules have heterogeneous effects across space with some states gaining and others losing with the Tax Cuts and Jobs Act of 2017.

The fourth chapter empirically measures how another federal tax incentive, ``Bonus'' depreciation, affects areas across the US differently. Incentives for capital investment are used in the US and around the world to inspire business growth with the stated goals of creating jobs. Using a panel regression model and cross sectional variation in exposure to the types of firms that benefit from Bonus depreciation, I show that moving from the 25th percentile to the 75th percentile of exposure to treated firms increases local employment by about 3%.