John M. Yinger PPA 810 - Ph.D. Seminar: Public Finance

SYRACUSE UNIVERSITY
The Maxwell School of Citizenship and Public Affairs

PPA 810 - Ph.D. Seminar: Public Finance
Spring 2011

Professor Yinger

451 Eggers Hall

Phone: (315) 443-9062

Email: jyinger@maxwell.syr.edu

http://faculty.maxwell.syr.edu/jyinger

Class Location:	070 Eggers
Class Time:	3:45 – 5:05 MW
Office Hours:	11:00 – 12:00 MW or by appointment

Please contact Mrs. Santy to make an appointment with the professor.

Mary Santy

426 Eggers Hall

Phone: (315) 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 070 Eggers, from 3:45 to 5:05 on Mondays and Wednesdays.

Class Format

Until 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 21. 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 25 to May 2. The final proposals will be due on May 9.

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 and 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. Several of the readings are also available through the Blackboard page for this class. 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.

Class 1: Property Tax Administration

Required Reading

T. H. Eom. “A Comprehensive Model of Determinants of Property Tax Assessment Quality: Evidence in New York State.” 2008. Public Budgeting and Finance, (Spring ) (28)1, pp. 58-81. (This is available on the class Blackboard page.)
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) [Pages 243-259 are required; the rest should be saved for later in the class.]

Optional Reading

M. Skidmore, C. L. Ballard, and T. R. Hodge. “Property Value Assessment Growth Limits and Redistribution of Property Tax Payments: Evidence from Michigan.” 2010. National Tax Journal, (September): pp. 509-538.
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.” 2004. National Tax Journal, (March): pp. 7-24.
D. L. Sjoquist and M. B. Walker, “Economies of Scale in Property Tax Assessment.” 1999. National Tax Journal, (June): pp. 207-220.
T. A. Sexon, S. M. Sheffrin, and A. O'Sullivan, “Proposition 13: Unintended Effects and Feasible Reforms.” 1999. National Tax Journal, (March): pp. 99-111.

Class 2: The Supply of Local Public Services I: Public Production Functions

Required 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." 2006. Journal of Policy Analysis and Management, (Winter): pp. 7-30. (This is available on the class Blackboard page.)

Optional Reading

D. Boyd , H. Lankford, S. Loeb, J. Rockoff, and J. Wyckoff, “The Narrowing Gap in New York City Teacher Qualifications and Its Implications for Student Achievement in High-Poverty Schools.” 2008. Journal of Policy Analysis and Management, (Autumn): pp. 793-818.
T. Dee, “Teachers, Race, and Student Achievement in a Randomized Experiment.” 2004. The Review of Economics and Statistics, 86 (1) (February): pp. 195-210.
W. D. Duncombe and J. Yinger, “An Analysis of Returns to Scale in Public Production, With an Application to Fire Protection.” 1993. Journal of Public Economics, (August): pp. 49-72.

Class 3: The Supply of Local Public Services II: Class Size

Required Reading

A. B. Krueger, “Experimental Estimates of Education Production Functions.” 1999. Quarterly Journal of Economics, (May): pp. 497-532. Available through www.jstor.org.

Optional Reading

D. Sims, “A Strategic Response to Class Size Reduction: Combination Classes and Student Achievement in California.” 2008. Journal of Policy Analysis and Management, (Summer): pp. 457-478.
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.” 2001. Economic Journal, (January): pp. 1-28.
M. Boozer and C. Rouse. “Intraschool Variation in Class Size: Patterns and Implications.” 2001. Journal of Urban Economics, (July): pp. 163-189.

Class 4: The Supply of Local Public Services IV: Cost Functions

Required 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): pp. 185-202. (This is available on the class Blackboard page.)
W.D. Duncombe and J. Yinger. “Are Education Cost Functions Ready for Prime Time? An Examination of their Validity and Reliability.” Forthcoming. Peabody Journal of Education. (This will be available soon on the class Blackboard page.)

Optional Reading

W.D. Duncombe and J. Yinger, "Measurement of Cost Differentials," In Handbook of Education Finance and Policy, edited by E. Fiske and H.F Ladd, (Laurance Erlbaum, 2007): pp. 238-256.

W.D. 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 to read/print this chapter online at: http://books.nap.edu/books/0309065631/html/index.html.

Class 5: The Supply of Local Public Services V: Student Weights

Required Reading

W.D. Duncombe and J. Yinger. "How Much More Does a Disadvantaged Student Cost?" 2005. Economics of Education Review, (October): pp. 513–532. Available through e-journals at the SU library.

Optional Reading

T. Downes and T. Pogue, "Adjusting School Aid Formulas for the Higher Cost of Educating Disadvantaged Students." 1994. National Tax Journal, (March): pp. 89-110.
A. Reschovsky and J. Imazeki. "Let No Child Be Left Behind: Determining the Cost of Improving Student Performance." 2003. Public Finance Review, (May): pp. 263-290.

Class 6: The Supply of Local Public Services VI: Consolidation

Required Reading

W.D. Duncombe and J. Yinger, "Does School District Consolidation Cut Costs?" 2007. Education Finance and Policy 2(4) (Fall): pp. 341-375. (This is available on the class Blackboard page.)
Y. Hu and J. Yinger. “The Impact of School District Consolidation on Housing Prices.” 2008. National Tax Journal 61(4) (December): pp. 609-634. (This is available on the class Blackboard page.)

Optional Reading

M. Andrews, W.D. Duncombe, and J. Yinger, "Revisiting Economies of Size in American Education: Are We Any Closer to a Consensus?" 2002. Economics of Education Review, (June): pp. 245-262.
D. M. Brasington, "Joint Provision of Public Goods: The Consolidation of School Districts." 1999. Journal of Public Economics, (September): pp. 373-393.

Class 7: The Supply of Local Public Services VII: Efficiency

Required Reading:

W.D. Duncombe and J. Yinger, "Measurement of Cost Differentials," In Handbook of Education Finance and Policy, edited by E. Fiske and H.F. Ladd (Laurance Erlbaum, 2007) pp. 238-256 (through section on efficiency only). (This is available on the class Blackboard page.)
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. (This is available on the class Blackboard page.)
A. K. Donahue, "The Influence of Management on the Cost of Fire Protection." 2004. Journal of Policy Analysis and Management, (Winter): 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.” 1999. Contemporary Economic Policy, (July): 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.” 1999. National Tax Journal, (March): pp. 113-128.
J. M. Poterba and K. S. Rueben, “The Effect of Property Tax Limits on Wages and Employment in the Public Sector.” 1995. American Economic Review, (May): pp. 384-389.

Class 8: 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." 1998. National Tax Journal, (June): pp. 239-262. Section on "Demand Model." (This is available on the class Blackboard page.)

Optional Reading

G. K. Turnbull and C. Chinkun, "The Median Voter According to GARP." 1998. Southern Economic Journal, (April): pp. 1001-1011.
T. Bergstrom and R. Goodman, "Private Demands for Public Goods." 1973. American Economic Review, (June): 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 9: 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," 2000. National Tax Journal, (March): pp. 153-168. (This is available on the class Blackboard page.)
Class notes, "State Aid in the Budget Constraint"

Optional Reading

W.D. Duncombe and J. Yinger. “Making Do: State Constraints and Local Responses in California’s Education Finance System.” Forthcoming. International Tax and Public Finance.
W.D. Duncombe and J. Yinger, "School Finance Reform: Aid Formulas and Equity Objectives." 1998. National Tax Journal, (June): pp. 239-262. Read the sections on "Aid Formulas and Equity Objectives" and "School Aid Simulations for New York." (This is available on the class Blackboard page.)
W.D. Duncombe and J. Yinger, "Financing Higher Student Performance Standards: The Case of New York." 2000. Economics of Education Review, (October): pp. 363-386. (This is available on the class Blackboard page.)
S. Gamkhar and W. Oates, “Asymmetries in the Response to Increases and Decreases in Intergovernmental Grants: Some Empirical Findings,” 1996. National Tax Journal, (December): pp. 501-512.

Class 10: The Demand for Local Public Services III: Property Tax Exemptions

Required Reading:

T. H. Eom, W.D 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.D 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) [Page 260 to the end.]

Class 11: The Demand for Local Public Services IV: Bidding and Sorting

Required 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." 1956. Journal of Political Economy, (October): pp. 416-424.

Class 12: The Demand for Local Public Services V: Tax Capitalization

Required 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. (These are available on the class Blackboard page.)
E. Eisenberg, "Intrajurisdictional Property Tax Capitalization Rates," Unpublished Ph.D. Dissertation, Syracuse University, 1996. Chapters 4-6. Available through Databases at the SU library. Type in "Dissertations & Theses @ 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 http://www.jstor.org/.
S. S. Rosenthal and C. deBartolomé, "Property Tax Capitalization in a Model with Tax Deferred Assets and Standard Deductions." 1999. Review of Economics and Statistics, (February): pp. 85-95. Available through http://www.jstor.org/.

Class 13: The Demand for Local Public Services: Hedonics

Required Reading

To be announced.

Class 14: The Demand for Local Public Services VI: Service Capitalization

Required Reading

To be announced.

Optional Reading

Patrick Bayer, Fernando Ferreira, Robert McMillan. 2007. “A Unified Framework for Measuring Preferences for Schools and Neighborhoods.” Journal of Political Economy 115 (4) (August): 558-638.

S. E. Black, “Do Better Schools Matter?: Parental Valuation of Elementary Education.” 1999. Quarterly Journal of Economics, (May): pp. 577-599. Available through e-journals at the SU library.

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." 1999. National Tax Journal, (June): pp. 157-178. Available through e-journals at the SU library.
C. L. Ballard and J. Lee, "Internet Purchases, Cross-Border Shopping, and Sales Taxes," 2007. National Tax Journal, (December): pp. 711-726. Available through e-journals at the SU library.

Optional Reading

J. Alm and M. I. Melnik. “Do eBay Sellers Comply with State Sales Taxes?” 2010. National Tax Journal, (June): pp. 215-236.
D. J. Young and A. Bielinshk-Kwapisz, "Alcohol Taxes and Beverage Prices." 2002. National Tax Journal, (March): pp. 57-74.
J. M. Poterba. "Retail Price Reactions to Changes in State and Local Sales Taxes." 1996. National Tax Journal, (June): pp. 165-176.
R. R. Hawkins, "Popular substitution effects: Excess burden estimates for general sales taxes." 2002. National Tax Journal, (December): pp. 755-71.
D. Bruce and W.F. Fox, "E-Commerce in the Context of Declining State Sales Tax Bases." 2000. National Tax Journal, (December): 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." 2001. National Tax Journal, (March): pp. 139-156. (This is available on the class Blackboard page.)

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." 1994. National Tax Journal, (June): pp. 295-316.
H. Chernick, "On the Determinants of Subnational Tax Progressivity in the U.S." 2005. National Tax Journal, (March): pp. 93-112.

Class 17: State and Local Revenue III: Tax Competition

Required Reading

J. C. Rork, "Coveting Thy Neighbors’ Taxation." 2003. National Tax Journal, (December): pp. 775-787. (This is available on the class Blackboard page.)
M. S. Tosun and M. Skidmore, "Interstate Competition and State Lottery Revenues." 2004. National Tax Journal, (June): pp. 163-178. Available through e-journals at the SU library.

Optional Reading

Donald Bruce, W. F. Fox, and Z. Yang. “Base Mobility and State Personal Income Tax Rates.” 2010. National Tax Journal, (December): 945-966.
J. K. Brueckner and L.A. Saavedra, "Do Governments Engage in Strategic Property-Tax Competition?" 2001. National Tax Journal, (June): pp. 203-230.

Class 18: State and Local Economic Development Policy I: Impact of Tax Rates

Required Reading

N. Bania and J. A. Stone, "Ranking State Fiscal Structure Using Theory and Evidence." 2008. Journal of Policy Analysis and Management, (Autumn): pp. 751-770. (This is available on the class Blackboard page.)

Optional 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. Type in "Dissertations & Theses @ Syracuse University".
A. Haughwout, R. Inman, S. Craig, and T. Luce. "Local Revenue Hills: Evidence from Four U.S. Cities.” 2004. Review of Economics and Statistics, (May): pp. 570-585.
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." 2002. National Tax Journal, (March): 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." 2000. National Tax Journal, (March): pp. 105-124.

Class 19: State and Local Economic Development Policy II: Impact of Tax Breaks

Required 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." 2001. Economic Development Quarterly, (May):pp. 132-148.

Optional Reading

J. Kolko and D. Newmark. “Do Some Enterprise Zones Create Jobs?” 2010. Journal of Policy Analysis and Management, (Winter): pp. 5-38.
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. Type in "Dissertations & Theses @ Syracuse University".
H.F. Ladd, "Spatially Targeted Economic Development Strategies: Do They Work?" 1994. Cityscape: A Journal of Policy Development and Research, 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 Insurance: 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.] (This is available on the class Blackboard page.)

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.” 2010. American Law and Economics Review 12 (1) (Spring): 1-38. (This is available on the class Blackboard page.)

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. (This is available on the class Blackboard page.)