nep-pbe New Economics Papers
on Public Economics
Issue of 2011‒05‒24
four papers chosen by
Keunjae Lee
Pusan National University

  1. Should Japanese Tax System Be More Progressive? By Shun-ichiro Bessho; Masayoshi Hayashi
  2. Local Government Efficiency: Evidence from the Czech Municipalities By Lenka Šastná; Martin Gregor
  3. A model on interests representation and;accountability in small local governments By Fabio FIORILLO
  4. Spatial Unemployment Differentials in Colombia By Ana Maria DIAZ ESCOBAR

  1. By: Shun-ichiro Bessho; Masayoshi Hayashi
    Abstract: We investigate the effects of marginal changes of marginal tax rates of Japanese income tax system, computing the social marginal costs of public funds (SMCF) generated by marginal increase in tax rates. We use large micro data sets on Japanese households, and estimate a structural discrete choice model of household labor supply. Our estimation results show that the average of total elasticity of males ranges between 0.0276 and 0.0521, and that of female between 0.0429 and 0.2134. Based on the estimated utility functions, we find that SMCF for raising the marginal tax rate applied for those with low- or medium-income level is smaller than those with more income. Our results could suggest Japanese income tax system should be less progressive.
    Keywords: Social marginal cost of public funds, structural discrete choice model, household labor supply
    JEL: H21 H24 H31 J22
    Date: 2011–03
  2. By: Lenka Šastná (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Martin Gregor (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: We measure cost efficiency of 202 Czech municipalities of extended scope in period 2003-2008. The study is the first application of overall efficiency measurement of the local governments in the new EU member states, and the second in post-communist countries. We measure government efficiency through established quantitative and qualitative indicators of the provision of education, cultural facilities, infrastructure and other local services. First, we employ non-parametric approach of the data envelopment analysis and adjust the efficiency scores by bootstrapping. Second, we employ the stochastic frontier analysis and control for effects of various demographic, economic, and political variables. We compare scores under our preferred specification, i.e. pseudo-translog time-variant stochastic-frontier analysis with determinants, with alternative scores. The determinants that robustly increase inefficiency are population size, distance to the regional center, share of university-educated citizens, capital expenditures, subsidies per capita, and the share of self-generated revenues. Concerning political variables, increase in party concentration and the voters' involvement increases efficiency, and local council with a lower share of left-wing representatives also tend to be more efficient. We interpret determinants both as indicators of slack, non-discretionary inputs, and unobservable outputs. The analysis is conducted also for the period 1994-1996, where political variables appear to influence inefficiency in a structurally different way. From comparison of the two periods, we obtain that small municipalities improve efficiency significantly more that large municipalities.
    Keywords: Public spending efficiency, Data Envelopment Analysis, Stochastic Frontier Analysis, local governments
    JEL: D24 H72
    Date: 2011–05
  3. By: Fabio FIORILLO ([n.a.])
    Abstract: Second generation theory of fiscal federalism do not consider two questions. 1) In small councils the relation between citizens and administrators is stronger than the one depicted in accountability models: in a small councils, citizens know directly and personally the administrators and they control them daily, not only in the electoral dates. 2) Local governments interpret and represent the local citizens' wishes to central government. Thus, they bargain with central government in order to represent local interests at central level. In this paper, even if governments are non benevolent both at local and central level, the accuracy in interpreting citizens' wishes is higher in small councils than in big ones, because citizens' control is higher in the former. On the contrary, the capacity of a council to make its requests be satisfied by central government is higher for a big council than for a small one. Thus, when the dimension of local government increases, the effectiveness of representation activity increases, but the objectives of citizens diverge from administrators' ones. Citizens face a trade-off between the strength of their local council in representing their interests at central level and the accuracy (accountability) in representing them. In this paper we propose a model which can tackle these two issues, we investigate on advantages of a territorial reform and we empirically validate the model.
    Keywords: Accountability, Fiscal Federalism, Interests Representation, Intergovernmental Grants, Territorial Reform
    JEL: H71 H77
    Date: 2011–05
  4. By: Ana Maria DIAZ ESCOBAR (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: This paper studies the geographic distribution of unemployment rates in Colombian urban areas. It introduces measures of spatial correlation and spatial econometric techniques to analyze the dependence in local unemployment rates across municipalities. Results suggest that Colombian municipalities have experienced a polarization process between 1993 and 2005, as municipalities' unemployment rates have followed different evolutions relative to the National average. This process has been accompanied by the creation of unemployment clusters, that is to say, municipalities had very similar unemployment outcomes to those of their neighbors. This analysis uses a spatial Durbin model to explore the influence of various factors in determining differences in regional unemployment rates. According to our findings differences in labor demand, immigration rates, and urbanization are factors behind observed municipal unemployment disparities.
    Keywords: local labor markets, unemployment di erential, polarization, clustering, spatial econometrics, spatial Durbin model
    JEL: R23 C14 C23 C31
    Date: 2011–04–27

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