House Prices and the Structure of Local Government: An Application of Spatial Statistics
Posted: 21 Jan 2004
When two internally homogeneous communities decide to jointly provide a public service, residents of each community lose some control over the public service provision. The loss of control over public schooling provision contributes to a $2929 or 3.5 percent drop in constant-quality house value. Increased heterogeneity of the consolidated district is responsible for almost all the drop; the increased number of service recipients alone is responsible for almost none of the drop. The spatial hedonic, corrected for sample selection bias, also suggests economies of scale gains from school district consolidation must be worth at least $3369-4% of house value.
Keywords: structure of local government, consolidation, spatial autoregression, capitalization
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