Essays in local public finance

My dissertation studies how political factors, local labor demand shocks, and voting behavior affect state and local public goods provision. Following a brief introduction, I begin with “Legislative Redistricting, Party Politics, and the Spatial Distribution of Transportation Expenditure.” In this essay, I estimate how a state representative's political party affects road construction expenditure in areas that she represents. An extensive literature asks how a legislator's party affiliation affects public expenditure in the area the legislator represents. Unfortunately, almost all studies estimate this effect using party changes through election outcomes, which could be correlated with unobservable determinants of transportation expenditure. To overcome this issue, I identify my estimates using changes in party affiliation engendered by the 2012 state legislative redistricting in Ohio. In many cases, redistricting moved a geographic area into a district whose incumbent representative belonged to the opposing political party. This created variation in partisan alignment unrelated to election outcomes. From 2010-2017 the Republican party controlled the Ohio House of Representatives, the Ohio Senate, and the governorship. Using variation due to redistricting for identification, I find that areas moving from Republican to Democratic districts due to redistricting received $3.5 million (0.19 standard deviations) less annual highway construction funding than areas that remained in Republican districts. This funding decrease derives from a decline in the number of large construction projects in these areas. The estimated effects differ substantially when identified using variation through voting in non-redistricting years, perhaps due to selection issues concerning the type of districts changing parties through election outcomes. In addition, the expenditure change associated with a party change through election outcomes depends on whether the incumbent lost an election or retired, further evincing selection issues associated with this variation.In my next essay, “Municipal Government Reaction to Mass Layoffs in Ohio,” I study how municipal government finances respond to negative local employment shocks. Using data from 595 municipalities in Ohio, I estimate the change in municipal revenue after reported mass layoffs and plant closings, as well as the municipality's response: possible adjustments to tax rates, expenditure, and borrowing. I find that income tax revenue plummets in the year after a mass layoff, driven by a large decline in income tax base. Municipalities do not raise income or property tax rates to compensate for the income tax drop - rather, tax rates decline slightly. Property tax revenue also declines, while revenue from service charges and fees and intergovernmental revenue do not change significantly. Thus, total revenue drops substantially for several years after a mass layoff. In response, municipalities cut expenditure across several categories, including general government, public safety, leisure and community environment, and capital outlay. Cities also draw down their unreserved fund balance substantially, avoiding deeper cuts to expenditure by depleting their accumulated funds.In my last essay, “ Ballot Order and Ballot Roll-off: Evidence from Ohio,” coauthored with Mike Conlin and Paul Thompson, I study how an election item’s position on the ballot affects the probability that voters abstain from voting on that item (“roll-off”), and on the probability that voters choose to vote yes conditional on casting a ballot. Local tax referenda in Ohio rotate ballot position every year based on the level of local jurisdiction that placed the referendum on the ballot, providing a source of exogenous variation to test these propositions. Previous research suggests that voters are less likely to cast a vote for election items lower on the ballot, and more likely to choose the status quo. These findings support the idea of choice fatigue, suggesting that facing more decisions impairs voters’ decision making ability. Unlike previous papers, I am able to control for demographic characteristics (age and party affiliation) of voters who see each referendum. I find that voters tend to cast more yes votes for items lower on the ballot. I also find that older voters are much less likely, and partisan voters much more likely, to abstain from ballot items, showing the importance of controlling for these characteristics when estimating the effect of ballot position on roll-off.