Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/147917
Authors: 
Feler, Leo
Senses, Mine Zeynep
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 10231
Abstract: 
We analyze the impact of trade-induced income shocks on the size of local government, and the provision of public services. Areas in the US with declining labor demand and incomes due to increasing import competition from China experience relative declines in housing prices and business activity. Since local governments are disproportionately funded through property and sales taxation, declining property values and a decrease in economic activity translate into less revenue, which constrains the ability of local governments to provide public services. State and federal governments have limited ability to smooth local shocks, and the impact on the provision of public services is compounded when local income shocks are highly correlated with shocks in the rest of the state. The outcome is greater inequality not only in incomes but also in the quality of public services and amenities across US jurisdictions.
Subjects: 
trade shocks
housing prices
intergovernmental transfers
public finance
public goods
JEL: 
F14
F16
H41
H70
R12
R23
Document Type: 
Working Paper

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