nep-pbe New Economics Papers
on Public Economics
Issue of 2011‒12‒05
eight papers chosen by
Keunjae Lee
Pusan National University

  1. The Impact of Governance Structure on Firm Performance: Evidence from Japanese Local Mixed Enterprises By Tomoyasu Tanaka; Takao Goto
  2. Sick of Taxes? Evidence on the Elasticity of Labor Supply when Workers Are Free to Choose By Martin Ljunge
  3. Outcomes of territorial competition and the role of intergovernmental transfers among Mexican regions By Alejandra Trejo; Cristina Ibarra
  4. Understanding Willingness to Support Higher Taxes for Urban Transportation Services: The Case of an American City By Jean-Claude Thill; Chunhua Wang
  5. Geographic Determinants of Hi-Tech Employment Growth in U.S. Counties By Dan Rickman; Belal Fallah; Mark Partridge
  6. Regional Inequalities and Economic Downturns By Davide Furceri, Dr; Fabio Mazzola, Dr
  7. Human Capital, R&D and Productivity Convergence of European Regions. A spatial analysis of RHOMOLO's semi endogenous growth approach. By Fabio Manca; Giuseppe Piroli
  8. Regional international migration distribution in Spain: which factors are behind? By Jose Villaverde; Adolfo Maza; María Hierro

  1. By: Tomoyasu Tanaka; Takao Goto
    Abstract: In Japan, many local mixed enterprises owned and operated jointly by local governments and private sectors had been established from the late 1980’s to the early 1990’s in order to provide public services more efficiently. At present, in Japan, many local mixed enterprises are confronted with a serial fiscal crisis. In 2007, the national government enacted the Local Public Finance Reconstruction Law and started to lead local mixed enterprises and local governments to achieve fiscal soundness. In addition to local governments, mixed enterprises have to make an effort to operate more efficiently. However, we believe that local mixed enterprises lack the incentives to manage more efficiently because of the governance structure. Firstly, as local mixed enterprises are owned by local governments, they can procure government-guaranteed funds and are able to raise capital more easily. Also, if business conditions of enterprises worsen, local governments give subsidies to bail out ailing enterprises. Managers do not have to worry about going bankrupt and might continue to carry out inefficient projects. Secondly, if managers are from local governments, or if the majority of the board members are local government officials, they might supply services without putting stress on profit. Therefore, it is possible that the governance structure of local mixed enterprises is the important factor that determines their performance. In this paper, we study the link between the performance and the governance structure in local mixed enterprises.
    Date: 2011–09
  2. By: Martin Ljunge (University of Copenhagen and SITE)
    Abstract: I estimate a price elasticity of sickness absence. Sick leave is an intensive margin of labor supply where individuals are free to adjust. I exploit variation in tax rates over two decades, which provide thousands of differential incentives across time and space, to estimate the price responsiveness. High taxes provide an incentive to take more sick leave, as less after tax income is lost when taxes are high. The panel data, which is representative of the Swedish population, allow for extensive controls including unobserved individual characteristics. I find a substantial price elasticity of sick leave, -0.7, with respect to the net of tax rate. Though large relative to traditional labor supply elasticities, Swedes are half as price elastic as bike messengers, and just as elastic as stadium vendors on the margin which they can adjust freely.
    Keywords: sick leave, adjustable labor supply, work effort, taxes
    JEL: H31 I31 J22
    Date: 2011–10–18
  3. By: Alejandra Trejo; Cristina Ibarra
    Abstract: In an environment of growing globalization, which goes along with a relative increase of factor mobility, the role of territories and its competitiveness is under debate. In order to spur local attraction territories often enter in competition with each other. At this respect it is commonplace that governments at various territorial levels apart from other public and private institutions concern about providing the conditions that make attractive their countries, regions or cities for productive activities and in so doing they get involved in the race for competitiveness. Even though competition involves the actions of multiple actors, these often are connected with each other through local policy makers. By and large, local government and regional development policy are regarded to play a central function in territorial competition and in fact can be considered that the competitive success of regions and cities cannot be achieved without the active action of local governments. To the extent to which governments are more conscious about the actual territorial competitive environment they will try to formulate more policies for the development of competitive capabilities. The actions and efforts may take many forms (marketing, assisting local businesses, constructing infrastructure, information and land provision, taxation and so on). Particularly governments may use programs or apply funds, which are available as a result of national or regional policy, to attend to local interests. However local governments’ actions depend to a large extent on their financial capabilities. The federal government in Mexico provides most of the financial support to states and municipalities on an ongoing basis through transfers and participations. These are federal transfers supporting specific policy areas or unconditional transfers.This paper is concerned with presenting an integrated framework for territorial competition analysis which emphasises the fundamental role of local government action and assessing the role of federal aid on the competitive results of Mexican regions. The methodology proposed will develop a series of competitive results indicators for Mexican regions and use a multivariate analysis to assess the influence of transfers and participations. The periods include those years when Mexico has been and opened and liberalised economy.
    Date: 2011–09
  4. By: Jean-Claude Thill; Chunhua Wang
    Abstract: This paper examines how a respondent’s socioeconomic characteristics influence her willingness to support tax increases for spending on highway transportation infrastructure and four modes of public transportation (i.e., bus, light rail, commuter rail, and streetcar) in a fast growing urban area in the United States. We use and analyze detailed survey data at household level collected from a phone interview survey conducted in the Charlotte, North Carolina, area. We consider two types of response bias in the survey data. One is a systematic response bias which arises from protest zeros and respondents’ tendency to under-report their willingness. The other is from the randomized response when a respondent answers survey questions by guessing because she does not have memory or knowledge of the questions and choices. Along with random utility model, these two response bias models are estimated and compared to each other. Empirical results show that an individual’s attitudes towards paying higher taxes are affected by the individual’s location, home ownership, and the level of educational attainment. It is found that respondents tend to grossly under-report their willingness to support higher taxes for investments on highways, bus, and commuter rail in the survey. Respondents also exhibit positive tendency to choose no increase in taxes in the survey about highway, bus, and commuter rail, although they actually prefer an increase over no increase. They have positive chance of randomly choosing slightly higher taxes for more investment on streetcar whatever her true preference is. We discuss policy implications of the empirical results.
    Date: 2011–09
  5. By: Dan Rickman; Belal Fallah; Mark Partridge
    Abstract: This paper examines the spatial pattern of U.S. county employment growth in high-tech industries. The spatial growth dimensions examined include industry cluster effects, urbanization effects, proximity to a college, and proximity in the urban hierarchy. Growth is examined for overall high-tech employment and for employment in various high-tech sectors. Econometric analyses are conducted for a sample of all counties and for metropolitan and non-metropolitan counties separately. Among our primary findings, we do not find evidence of positive localization or cluster growth effects, generally finding negative growth effects. We instead find some evidence of positive urbanization effects and growth penalties for greater distances from larger urban areas.
    Date: 2011–09
  6. By: Davide Furceri, Dr; Fabio Mazzola, Dr
    Abstract: The aim of this paper is to analyze the impact of economic downturns on regional inequalities. From a theoretical point of view regional inequalities may change in the aftermath of economic downturns if different regions have a different degree of resilience to a common shock or/and a different speed of adjustment. To test for this hypothesis we estimate the dynamic response of regional inequalities to economic downturns, controlling and interacting for country’s structural and policy variables associated to regional inequalities. The set of such variables includes, among others, the share of rural population, demographic changes, educational disparities, production diversification, the level of country development, the size of fiscal transfers and social spending. The approach we propose consists of estimating Impulse Response Functions (IRFS) based on local projections (Jordan, 2005) of the effect of downturns on regional inequalities. For each period, we estimate a direct and and an indirect effect which takes into account the interaction between the downturn occurrence and the structural/policy variables. Using an unbalanced panel of 29 OECD countries from 1993 to 2005, the paper shows that economic downturns are associated with a significant and long-lasting reduction in regional inequalities. The effect is a function of the severity of the downturn and it varies across countries. The empirical results are economically and statistically significant, and robust.
    Date: 2011–09
  7. By: Fabio Manca; Giuseppe Piroli
    Abstract: The aim of the paper is to test the Benhabib and Spiegel (2005) productivity (TFP) catch-up framework on European regions. Differences in the stock of human capital across regions are hypothesized to be the cause of differences in the speed by which follower regions converge and catch-up with the technology frontier. We find robust empirical evidence for this hypothesis. Also, we find evidence of complementarities between R&D expenditures and human capital accumulation for which R&D impacts TFP growth as long as a critical mass for the stock of human capital is reached. The results are robust to sectoral disaggregations and to the choice of a country or sectoral specific leader in the TFP gap computation and to control for spatial dependence across European regions.
    Date: 2011–09
  8. By: Jose Villaverde; Adolfo Maza; María Hierro
    Abstract: International migration issues are at the forefront of the political debate in the European Union (EU). Some reasons justify the increasing relevance of this topic, being the unprecedented scale of international migration flows, especially in countries such as Spain, the most prominent. In fact, adequate responses to the necessity for controlling effectively large flows of irregular immigration, and also safeguarding the internal security, are insistently demanded and always placed in the center of the political debate. Thus, recent studies portraying immigration experiences in the EU have been prolific in the literature on international migration. Some of these were applied to Spain as a representative country of changes in international migration patterns. However, and although some contributions to the analysis of international migration in Spain have been made, an examination of the international migration distribution (IMD) is still a pending question that needs further analysis. Accordingly, the aim of this paper is to analyse some relevant aspects on IMD in Spain at regional level. After a descriptive analysis showing the importance that international migration plays in today’s Spanish demography and economy, the paper examines the IMD’s external shape and its intra-distribution mobility. Subsequently, an analysis of the factors that might be behind the IMD and its dynamics is carried out. The results will give information about the role played by factors such as geographical location, per capita income, industry mix, employment density and social networks in explaining this issue. Keywords: international migration; Spanish regions; distribution dynamics; highest density regions
    Date: 2011–09

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