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Strategic Interactions among Swedish Local Governments
Uppsala University, Humanistisk-samhällsvetenskapliga vetenskapsområdet, Faculty of Social Sciences, Department of Economics.
2007 (English)Doctoral thesis, monograph (Other academic)
Abstract [en]

Essay 1 (with Matz Dahlberg) investigates if local governments react on the welfare benefit levels in neighbouring jurisdictions when setting their own benefit levels. The IV estimates indicate that there exists a "race-to-the-bottom" and that the effect is economically as well as statistically significant.

Essay 2 tests for strategic competition in public spending on childcare and primary education, and care for the elderly, in Swedish municipalities. The study is not limited to interactions in the same type of expenditure, but also allows for effects across expenditures. The results give no robust support for the hypothesis that municipalities react on the spending policy of neighbouring municipalities in the decision on own spending on care of the elderly, childcare and education.

Essay 3 (with Hanna Ågren) uses data on Swedish local governments to test for strategic interaction in local tax setting. We make use of a number of indirect predictions from the theories of tax competition and yardstick competition in order to test for the presence of strategic interaction in these forms. The analysis provides strong evidence for spatial correlation in tax rates among Swedish local governments. Moreover, we find weak evidence of tax competition effects in the setting of tax rates.

Essay 4 tests for a migration response to the implementation of stricter rules for welfare benefit receipt in Stockholm town districts. The hypothesis is that welfare benefit prone individuals will choose to live in a town district that has no program if they dislike the loss of leisure due to program participation more than they value the contents of the program, and vice versa. The results give weak indications of a negative effect of the program on the outmigration of welfare prone individuals.

Place, publisher, year, edition, pages
Uppsala: Acta Universitatis Upsaliensis , 2007. , 141 p.
Series
Economic studies, ISSN 0283-7668 ; 105
Keyword [en]
Economics, Strategic Interactions, Spatial Interactions, Tax Competition, Welfare Competition, Fiscal Federalism
Keyword [sv]
Nationalekonomi
Identifiers
URN: urn:nbn:se:uu:diva-8211ISBN: 978-91-85519-12-5 (print)OAI: oai:DiVA.org:uu-8211DiVA: diva2:170711
Public defence
2007-09-24, Hörsal 2, Ekonomikum, Kyrkogårdsgatan 10, Uppsala, 10:00
Opponent
Supervisors
Available from: 2007-09-03 Created: 2007-09-03Bibliographically approved
List of papers
1. Is There a "Race-to-the-Bottom" in the Setting of Welfare Benefit Levels?: Evidence from a Policy Intervention
Open this publication in new window or tab >>Is There a "Race-to-the-Bottom" in the Setting of Welfare Benefit Levels?: Evidence from a Policy Intervention
2008 (English)In: Journal of Public Economics, ISSN 0047-2727, E-ISSN 1879-2316, Vol. 92, no 5-6, 1193-1209 p.Article in journal (Refereed) Published
Abstract [en]

In this paper we investigate whether local governments react on the welfare benefit levels in neighboring jurisdictions when setting their own benefit levels. We solve the simultaneity problem arising from the welfare game by utilizing a policy intervention; more specifically, we use a centrally geared exogenous placement of a highly welfare prone group (refugees) among Swedish municipalities as an instrument. The IV estimates indicate that there exists a "race-to-the-bottom" and that the effect is economically as well as statistically significant; if the neighboring municipalities decrease their welfare benefit level by 100 SEK, a municipality decreases its benefit level with approximately 41 SEK. This result is robust to several alternative model specifications.

Keyword
Policy intervention, Race-to-the-bottom, Strategic interactions, Welfare benefit level
National Category
Economics and Business
Identifiers
urn:nbn:se:uu:diva-96209 (URN)10.1016/j.jpubeco.2007.12.001 (DOI)000255449700017 ()
Available from: 2007-09-03 Created: 2007-09-03 Last updated: 2011-01-11Bibliographically approved
2. Strategic Competition in Swedish Local Spending on Childcare, Schooling and Care for the Elderly
Open this publication in new window or tab >>Strategic Competition in Swedish Local Spending on Childcare, Schooling and Care for the Elderly
(English)Manuscript (Other academic)
National Category
Economics
Identifiers
urn:nbn:se:uu:diva-96210 (URN)
Available from: 2007-09-03 Created: 2007-09-03 Last updated: 2012-01-03Bibliographically approved
3. Identifying Strategic Interactions in Swedish Local Income Tax Policies
Open this publication in new window or tab >>Identifying Strategic Interactions in Swedish Local Income Tax Policies
2008 (English)In: Journal of Urban Economics, ISSN 0094-1190, E-ISSN 1095-9068, Vol. 63, no 6, 849-857 p.Article in journal (Refereed) Published
Abstract [en]

This paper uses data on Swedish local governments to test for strategic interaction in local tax setting. We make use of a number of indirect predictions from the theories of tax competition and yardstick competition in order to test for the presence of strategic interaction in these forms. Using such additional predictions of the theories serves a twofold purpose-first it helps us establish if the spatial coefficient is due to strategic interactions or merely reflecting spatial error correlation, and second, it helps identify the source of interaction. The analysis provides strong evidence for spatial correlation in tax rates among Swedish local governments. Moreover, we find weak evidence of tax competition effects in the setting of tax rates.

Keyword
Fiscal Federalism, Local income tax, Spatial auto-correlation, Tax competition, Yardstick competition
National Category
Economics
Identifiers
urn:nbn:se:uu:diva-96211 (URN)10.1016/j.jue.2007.06.001 (DOI)000255724900007 ()
Available from: 2007-09-03 Created: 2007-09-03 Last updated: 2011-01-11Bibliographically approved
4. Did the Introduction of Activation Programs in Stockholm Town Districts Affect the Moving Choices of Welfare Prone Individuals?
Open this publication in new window or tab >>Did the Introduction of Activation Programs in Stockholm Town Districts Affect the Moving Choices of Welfare Prone Individuals?
(English)Manuscript (Other academic)
National Category
Economics
Identifiers
urn:nbn:se:uu:diva-96212 (URN)
Available from: 2007-09-03 Created: 2007-09-03 Last updated: 2011-09-13Bibliographically approved

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