SYRACUSE UNIVERSITY
The Maxwell School of Citizenship and Public Affairs
PPA 810–4
Ph.D. Seminar: Public Finance
Professor Yinger
Spring 2007
Professor Yinger
451 Eggers Hall
Phone: 443-9062
Email: jyinger@maxwell.syr.edu
http://faculty.maxwell.syr.edu/jyinger
Class Time: MW 3:45-5:05
Class Location: Eggers 112
Office Hours: MW 11:00-12:00 or by appointment
Please contact Mrs. Santy to make an appointment with the professor.
Secretary: Mary Santy
426 Eggers Hall
Phone: 443-3115
Email: mjsanty@maxwell.syr.edu
Course Overview and Requirements:
This course covers selected topics in state and local public finance at the Ph.D. level. It is specifically designed for Ph.D. students in the Public Administration Department. The topics covered are the supply of local public services (including production functions, cost functions, and efficiency), the demand for local public services (including local responses to state aid, household choice of a community, and the impact of local public services on house values), state and local revenues, state and local economic development, and state and local bonds. The principal objective of the course is to train scholars, so the assignments are designed to help students master existing research and to start conducting research on their own.
Time & Place
The class will meet in the economics seminar room, Eggers 112, from 3:45 to 5:05 on Mondays and Wednesdays.
Class FormatUntil the end of the class, when there will be student presentations, the class will consist of lectures—with plenty of opportunity for student participation. Most of the lectures will start by providing background on the research and policy issues raised by a topic and then will present one or more articles on the topic in some detail. Students are encouraged to complete the assigned reading before class so that they can ask questions and participate in the discussion.
Prerequisite
This class is open to any Ph.D. students in the P.A. department. It is not open to undergraduates or MPA students. Any Ph.D. student from another department should contact the professor to see if he or she has the background for the class.
Assignments
The assignments for this class consist of (1) a draft research proposal, (2) a class presentation of a revised research proposal, (3) a final research proposal, and (4) a final exam.
The first three assignments must be completed in sequence. The draft research proposal is due by March 19. This timing makes it possible for each student to receive feedback from the professor to incorporate into the final proposal. The student presentations will be scheduled at the end of the class, roughly from April 23 to April 30. The final proposals will be due on May 7.
The research proposal must contain the following elements: (a) a description of the behavior to be studied and a statement about why it is important, (b) a literature review, (c) a conceptual framework, (c) a description of the data required (preferably with reference to existing data sets), and (d) a discussion of the statistical methodology to be used. No data need be collected, although data collection and analysis is certainly not forbidden! The main point of this assignment is to master the literature on a topic in state and local public finance and then to develop a conceptually sensible, methodologically feasible way to extend this literature. This proposal may address any of the topics covered in the class or another topic in state an local public finance that has been approved by the professor.
The final exam is primarily designed to give students practice (and feedback) in preparation for the Public Administration’s comprehensive examination in public budgeting and finance. As a result, the exam will consist of a few in-depth questions (with choice). Students in the class who do not plan to take this comprehensive exam must still take the final exam!
Grades
The following weights will be used to determine each student's final grade in the course:
Draft research proposal 1/12 Class Presentation 1/12 Final research proposal 1/2 Final Exam 1/3
Reading
The readings for the class are listed below. Most of the required readings are recent examples of high-quality empirical research in state and local public finance. A few of the required readings provide conceptual foundations for key topics. The optional readings provide additional examples of good recent empirical research, along with surveys or classic articles that will help students who want to study a particular topic in more depth. These readings include recent dissertations by students in the Public Administration Department, recent articles by Maxwell faculty, recent articles by well known scholars, and, in a few cases, exploratory work on topics that are difficult to study.
Instructions for finding each reading are provided. Many of the readings come from the National Tax Journal, which is available though the e-journals at the library. Most of the other journal articles are available through this source, as well. Most of the optional readings are available through the internet, but interested students will have to track down some of these readings on their own. Students are encouraged to look at the National Tax Journal, the Journal of Public Economics, the Public Finance Review, and Public Budgeting and Finance to find other articles on topics they wish to pursue.
The reading list also serves as a class schedule.
Class 1: Property Tax Administration
Required Reading
T. H. Eom, “Evaluation of the Property Tax Administration System in New York State.” First Essay in Unpublished Ph.D. Dissertation, Syracuse University, 2004.
W. Duncombe and J. Yinger, “Alternative Paths to Property Tax Relief.” In Property Taxation and Local Government Finance, edited by W.E. Oates (Lincoln Institute of Land Policy, 2001), pp. 243-294. Pages 1-12 are required; the rest should be saved for later in the class.
Optional Reading
R. P. Strauss and D. A. Strauss, “Residential Real Estate Assessment Fairness in Four Urban Areas,” Proceedings of the Ninety-Sixth Annual Conference (Washington, D.C.: National Tax Association, 2004), pp. 298-305.
K. R. Ihlanfeldt, “The Use of an Econometric Model for Estimating Aggregate Levels of Property Tax Assessment Within Local Jurisdictions,” National Tax Journal, March 2004, pp. 7-24.
D. L. Sjoquist and M. B. Walker, “Economies of Scale in Property Tax Assessment,” National Tax Journal, June 1999, pp. 207-220.
T. A. Sexon, S. M. Sheffrin, and A. O'Sullivan, “Proposition 13: Unintended Effects and Feasible Reforms,” National Tax Journal, March 1999, pp. 99-111.
Class 2: The Supply of Local Public Services I: Public Production
FunctionsRequired Reading
L. Stiefel, A.E. Schwartz, and I.G. Ellen, "Disentangling the Racial Test Score Gap: Probing the Evidence in a Large Urban School District," Journal of Policy Analysis and Management, Winter 2007, pp. 7-30. (Handout)
Optional Reading
R. Ferguson and H. F. Ladd, “How and Why Money Matters: An Analysis of Alabama Schools,” in Holding Schools Accountable: Performance-based Reform in Education, edited by H. F. Ladd (Washington, DC: The Brookings Institution, 1996), pp. 265–298.
B. A. Jacob and L. Lefgren. “Remedial Education and Student Achievement: A Regression-Discontinuity Design,” Review of Economics and Statistics, February 2004, pp. 226-244.
T. Dee, “Teachers, Race, and Student Achievement in a Randomized Experiment,” The Review of Economics and Statistics, 86 (1) February 2004: 195-210.
W. D. Duncombe and J. Yinger, “An Analysis of Returns to Scale in Public Production, With an Application to Fire Protection,” Journal of Public Economics, August 1993, pp. 49-72.
Class 3: The Supply of Local Public Services II: Class SizeRequired Reading:
A. B. Krueger, “Experimental Estimates of Education Production Functions,” Quarterly Journal of Economics, May 1999, pp. 497-532. Available through www.jstor.org.
Optional Reading:
A. B. Krueger “Economic Considerations and Class Size,” Working Paper No. 8875, Cambridge, MA: National Bureau of Economic Research, 2002.
A. B. Krueger and D. M. Whitmore, “The Effect of Attending a Small Class in the Early Grades on College-Test Taking and Middle School Test Results: Evidence from Project STAR,” Economic Journal, January 2001, pp. 1-28.
M. Boozer and C. Rouse. “Intraschool Variation in Class Size: Patterns and Implications,” Journal of Urban Economics, July 2001, pp. 163-189.
Class 4: The Supply of Local Public Services III: Whole-School
ReformRequired Reading
R. Bifulco, W. Duncombe, and J. Yinger, “Does Whole-School Reform Boost Student Performance: The Case of New York City,” Journal of Policy Analysis and Management, Forthcoming. [This article builds on R. Bifulco’s dissertation at Syracuse University.]
Optional Reading
A. E. Schwartz, L. Stieffel, and D.Y. Kim, “The Impact of School Reform on Student Performance: Evidence from the New York Network for School Renewal Project,” Journal of Human Resources, Spring 2004, pp. 500-522.
H. S. Bloom, J. Rock, S. Ham, L. Melton, and L. O’Brien. Evaluating the Accelerated Schools Approach: A Look at Early Implementation and Impacts on Student Achievement in Eight Elementary Schools (New York: Manpower Demonstration Research Corporation, 2001). Available at http://www.mdrc.org/publications/107/full.pdf.
Class 5: The Supply of Local Public Services IV: Cost FunctionsRequired Reading
D. Bradford, R.A. Malt, W.E. Oates. 1969. “The Rising Cost of Local Public Services: Some Evidence and Reflections.” National Tax Journal 22(2): 185-202.
W. Duncombe and J. Yinger, “Performance Standards and Educational Cost Indexes: You Can't Have One Without the Other,” in Equity and Adequacy in Education Finance, edited by H. F. Ladd, R. Chalk, and J. S. Hansen (Washington, D.C.: National Academy Press, 1999). Available at:
http://books.nap.edu/books/0309065631/html/index.html.
Optional Reading
W. Duncombe and J. Yinger, "Measurement of Cost Differentials," Forthcoming in Handbook of Education Finance, edited by E. Fiske, H. Ladd and L. Stiefel, (Laurance Erlbaum).
Class 6: The Supply of Local Public Services V: Student WeightsRequired Reading
W. Duncombe and J. Yinger. "How Much More Does a Disadvantaged Student Cost?" Economics of Education Review, October, 2005 pp. 513–532. Available through e-journals at the SU library.
Optional ReadingT. Downes and T. Pogue, “Adjusting School Aid Formulas for the Higher Cost of Educating Disadvantaged Students,” National Tax Journal, March 1994, pp. 89-110.
A. Reschovsky and J. Imazeki. “Let No Child Be Left Behind: Determining the Cost of Improving Student Performance.” Public Finance Review, May 2003, pp. 263-290.
Class 7: The Supply of Local Public Services VI: Consolidation
Required Reading
W. Duncombe and J. Yinger, "Does School District Consolidation Cut Costs?" CPR Working Paper No. 33.
Slides
Optional ReadingM. Andrews, W. Duncombe, and J. Yinger, “Revisiting Economies of Size in American Education: Are We Any Closer to a Consensus?” Economics of Education Review, June 2002, pp. 245-262.
D. M. Brasington, "Joint Provision of Public Goods: The Consolidation of School Districts." Journal of Public Economics, September 1999, pp. 373-393.
Class 8: The Supply of Local Public Services VII: Efficiency
Required Reading:
W. Duncombe and J. Yinger, "Measurement of Cost Differentials," Forthcoming in Handbook of Education Finance, edited by E. Fiske, H. Ladd and L. Stiefel, (Laurance Erlbaum) pp. 1-8.
T. S. Dee, “The ‘First Wave’ of Accountability,” in No Child Left Behind? The Politics and Practice of Accountability, edited by P. Peterson and M. West (Washington, D.C.: The Brookings Institution, 2003), pp. 215-241. (Handout)
A. K. Donahue, “The Influence of Management on the Cost of Fire Protection,” Journal of Policy Analysis and Management, Winter 2004, pp. 71-92. Available through e-journals at the SU library.
Optional Reading:
R. Rubenstein, L. Stiefel, A.E. Schwartz, and H.B.H. Amor, “Distinguishing Good Schools from Bad in Principle and Practice: A Comparison of Four Methods.” In Developments in School Finance: 2003, edited by W. J. Fowler, Jr. (Washington, D.C.: National Center for Education Statistics,
2004), pp. 53-70. Available at http://nces.ed.gov/pubs2004/2004325.pdf.
J. Ruggiero, and D. F. Vitaliano, “Assessing the Efficiency of Public Schools Using Data Envelopment Analysis and Frontier Regression,” Contemporary Economic Policy, July 1999, pp, 321-332.
T. A. Downes and D. N. Figlio, “Do Tax and Expenditure Limits Provide a Free Lunch? Evidence on the Link Between Limits and Public Sector Service Quality,” National Tax Journal, March 1999, pp. 113-128.
J. M. Poterba and K. S. Rueben, “The Effect of Property Tax Limits on Wages and Employment in the Public Sector,” American Economic Review, May 1995, pp. 384-389.
Class 9: The Demand for Local Public Services I: Median Voter and Other Approaches
Required Reading:
W. Duncombe and J. Yinger, "School Finance Reform: Aid Formulas and Equity Objectives," National Tax Journal, June 1998, pp. 239-262. Section on “Demand Model.”
Optional Reading:
G. K. Turnbull and C. Chinkun, "The Median Voter According to GARP," Southern Economic Journal, April 1998, pp. 1001-1011.
T. Bergstrom and R. Goodman, "Private Demands for Public Goods," American Economic Review, June 1973, pp. 280-296.
D. L. Rubinfeld, "The Economics of the Local Public Sector," in Handbook of Public Economics, Vol. 2, edited by A. J. Auerbach and M. Feldstein (Amsterdam: North-Holland, 1987).
Class 10: The Demand for Local Public Services II: State Aid
Required Reading
J. Yinger. "State Aid and the Pursuit of Educational Equity: An Overview." In Helping Children Left Behind: State Aid and the Pursuit of Educational Equity, edited by J. Yinger (MIT Press, 2004), pp. 3-57.
R. C. Fisher and L. E. Papke, "Local Government Responses to Education Grants," National Tax Journal, March 2000, pp. 153-168.
Class notes, "State Aid in the Budget Constraint"
Optional Reading
W. Duncombe and J. Yinger, "School Finance Reform: Aid Formulas and Equity Objectives," National Tax Journal, June 1998, pp. 239-262. Sections on “Aid Formulas and Equity Objectives” and “School Aid Simulations for New York.”
W. Duncombe and J. Yinger, "Financing Higher Student Performance Standards: The Case of New York," Economics of Education Review, October 2000, pp. 363-386.
S. Gamkhar and W. Oates, “Asymmetries in the Response to Increases and Decreases in Intergovernmental Grants: Some Empirical Findings,” National Tax Journal, December 1996, pp. 501-512.
Class 11: The Demand for Local Public Services III: Property Tax
ExemptionsRequired Reading:
T. H. Eom, W. Duncombe and J. Yinger "The Unintended Consequences of Property Tax Relief: The Case of New York's Star Program," Working Paper, January 2007.
Optional Reading:
W. Duncombe and J. Yinger, "Alternative Paths to Property Tax Relief." In Property Taxation and Local Government Finance, edited by W.E. Oates (Lincoln Institute of Land Policy, 2001), pp. 243-294. Pages 12 to end.
Class 12: The Demand for Local Public Services IV: Bidding and
SortingRequired Reading
J. Yinger, “Bidding and Sorting," (Notes for a Class in State and Local Public Finance), and “Bidding and Sorting Graphs"
Optional Reading
S. Ross and J. Yinger, “Sorting and Voting: A Review of the Literature on Urban Public Finance,” In Handbook of Urban and Regional Economics, Volume 3, Applied Urban Economics, edited by P. Cheshire and E. S. Mills (North-Holland, 1999), pp. 2001-2060.
C. Tiebout, "A Pure Theory of Local Expenditures," Journal of Political Economy, October 1956, pp. 416-424.
Class 13: The Demand for Local Public Services V: Tax
CapitalizationRequired Reading
J. Yinger, H. Bloom, A. Börsch‑Supan, and H.F. Ladd, Property Taxes and House Values (Academic Press, 1988), Chapter 1 , Chapter 5, Chapter 6 and Chapter 7.
E. Eisenberg, "Intrajurisdictional Property Tax Capitalization Rates," Unpublished Ph.D. Dissertation, Syracuse University, 1996. Chapters 4-6. Available through Databases at the SU library. Select "General" under "General and Interdisciplinary" and scroll down to the database called "Dissertations @ Syracuse University"
Optional Reading
W. E. Oates, "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, November/December 1969, pp. 957-971. (See also the exchange between Pollakowski and Oates, JPE, July/August 1973.) Available through www.jstor.org.
S. S. Rosenthal and C. deBartolomé, "Property Tax Capitalization in a Model with Tax Deferred Assets and Standard Deductions," Review of Economics and Statistics, February 1999, pp. 85-95. Available through www.jstor.org.
Class 14: The Demand for Local Public Services VI: Service
CapitalizationRequired Reading
W. T. Bogart and B. Cromwell, “How Much More Is a Good School District Worth?” National Tax Journal, 1997, pp. 215-232. Available through e-journals at the SU library.
S. E. Black, “Do Better Schools Matter?: Parental Valuation of Elementary Education,” Quarterly Journal of Economics, May 1999, pp. 577-599. Available through e-journals at the SU library.
Optional Reading
T. A. Downes and J.E. Zabel. "The Impact of School Characteristics on House Prices: Chicago 1987-1991. Journal of Urban Economics, July 2002, pp. 1-25.
D. M. Brasington. "Capitalization and Community Size." Journal of Urban Economics, November 2001, pp. 385-395.
D. L. Weimer and M. J. Wolkoff, "School Performance and Housing Values: Using Non-Continuous District and Incorporation Boundaries to Identify School Effects," National Tax Journal, June 2001, pp. 231-253.
Class 15: State and Local Revenue I: Sales Taxes
Required Reading
T. J. Besely and H. S. Rosen, "Sales Taxes and Prices: An Empirical Analysis," National Tax Journal, June 1999, pp. 157-178. Available through e-journals at the SU library.
Optional Reading
D. J. Young and A. Bielinshk-Kwapisz, "Alcohol Taxes and Beverage Prices," National Tax Journal, March 2002, pp. 57-74.
J. M. Poterba. "Retail Price Reactions to Changes in State and Local Sales Taxes." National Tax Journal, June 1996, pp. 165-176.
R. R. Hawkins, “Popular substitution effects: Excess burden estimates for general sales taxes," National Tax Journal, December 2002, pp. 755-71.
D. Bruce and W.F. Fox, "E-Commerce in the Context of Declining State Sales Tax Bases," National Tax Journal, December 2000, pp. 1373-1388.
Class 16: State and Local Revenue II: Property Tax Incidence
Required Reading
J. Yinger, “Notes on the Incidence of the Property Tax,”
G. Zodrow, “The Property Tax as a Capital Tax: A Room with Three Views,” National Tax Journal, March 2001, pp. 139-156.
Optional Reading
H. F. Ladd, "Theoretical Controversies: Land and Property Taxation," in Local Government Tax and Land Use Policies in the United States, edited by H. F. Ladd (Cheltenham, UK: Edward Elgar, 1998), pp. 25-54.
R. J. Carroll and J. Yinger. "Is the Property Tax a Benefit Tax? The Case of Rental Housing," National Tax Journal, June 1994, pp. 295-316.
H. Chernick, "On the Determinants of Subnational Tax Progressivity in the U.S," National Tax Journal, March 2005, pp. 93-112.
Class 17: State and Local Revenue III: Tax Competition
Required Reading
J. C. Rork, “Coveting Thy Neighbors’ Taxation,” National Tax Journal, December 2003, pp. 775-788.
M. S. Tosun and M. Skidmore, "Interstate Competition and State Lottery Revenues," National Tax Journal, June 2004, pp. 163-178. Available through e-journals at the SU library.
Optional Reading
J. K. Brueckner and L.A. Saavedra, "Do Local Governments Engage in Strategic Property-Tax Competition?" National Tax Journal, June 2001, pp. 203-230.
Class 18: State and Local Economic Development Policy I: Impact
of Tax RatesRequired Reading
W. Wong, "Taxes and State and Local Economic Development: The Homestead Tax Option in New York," unpublished Ph.D. dissertation, Syracuse University, 1998. Chapters 4 and 5. Available through Databases at the SU library. Select "General" under "General and Interdisciplinary" and scroll down to the database called "Dissertations @ Syracuse University"
A. Haughwout, R. Inman, S. Craig, and T. Luce. "Local Revenue Hills: Evidence from Four U.S. Cities,” Review of Economics and Statistics, May 2004, pp. 570-585.
Optional Reading
D. J. Bruce, J. Deskins, and M. Mohsin, "State Tax Policies and Entrepreneurial Activity: A Panel Data Analysis," Proceedings of the Ninety-Sixth Annual Conference (Washington, D.C.: National Tax Association, 2004), pp. 325-335.
D. J. Bruce, "Taxes and Entrepreneurial Endurance: Evidence from the Self-Employed," National Tax Journal, March 2002, pp. 5-24.
S. T. Mark, T. J. McGuire, and L. E. Papke, "The Influence of Taxes on Employment and Population Growth: Evidence from the Washington, D.C. Area," National Tax Journal, March 2000, pp. 105-124.
Class 19: State and Local Economic Development Policy II: Impact
of Tax BreaksRequired Reading
R.W. Wassmer and J.E. Anderson, "Bidding for Business: New Evidence on the Effect of Locally Offered Economic Development Incentives in a Metropolitan Area," Economic Development Quarterly, May 2001, pp. 132-148.
Optional Reading
J. Y. Man, "The Effect of State and Local Tax Incentive Programs on Job Growth," Proceedings of Ninety-Fifth Annual Conference on Taxation (Washington, D.C.: National Tax Association, 2003), pp. 316-322
Y. Wu, "Three Essays on R&D Investment and Economic development," unpublished Ph.D. dissertation, Syracuse University, 2003. Available through Databases at the SU library. Select "General" under "General and Interdisciplinary" and scroll down to the database called "Dissertations @ Syracuse University"
Helen F. Ladd, "Spatially Targeted Economic Development Strategies: Do They Work?" Cityscape: A Journal of Policy Development and Research, 1994, pp. 193-218.
Class 20: State and Local Bonds I: Issuing Bonds
Required Reading:
M. D. Robbins, "Testing the Effect of Sale Method Restrictions in Municipal Bond Issues: The Case of New Jersey," Public Budgeting and Finance, Summer 2002, pp. 40-56. [This article is based on M. D. Robbins dissertation at Syracuse University.]
Optional Reading
The Bond Market Association, "An Investor’s Guide to Bond Basics” and “Municipal Bonds." Available at
http://www.investinginbonds.com.S. Gankhar, "Factors Affecting School Choice of Bonds," 2002 Proceedings of the National Tax Association, pp. 396-408.
D. Zimmerman and E. Pinkston, "Tax-Credit Bonds: Are There Advantages to this New Financial Instrument that Compensate for Introducing Additional Complexity?" Proceedings of the Ninety-Sixth Annual Conference (Washington, D.C.: National Tax Association, 2004), pp. 426-431.
Class 21: State and Local Bonds II: Ratings
Required Reading:
J. Yinger, "Municipal Bond Ratings and Citizens Rights," Working Paper, December 2006.
Optional Reading
S. Ammar, W. Duncombe, Y. Hou, B. Jump, and R. Wright, "Using Fuzzy Rule-Based Systems to Evaluate Overall Financial Performance of Governments: An Enhancement to the Bond Rating Process," Public Budgeting and Finance, 21 (4) Winter 2001, pp. 91-110.