NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Productivity of Schools and Other Local Public Goods Providers

Caroline M. Hoxby

NBER Working Paper No. 6911
Issued in January 1999
NBER Program(s):   PE

I construct an agency model of local public goods producers with special reference to public schools. The model assumes that households make Tiebout choices among jurisdictions, but it has more realistic assumptions about information and the cost of residential mobility. I examine producers' effort and rent under local property tax finance and centralized finance. I show that, if there are a sufficient number of jurisdictions to choose among, conventional local property tax finance substantially reduces the agency problem and associated loss of productivity. Specifically, I demonstrate that local property tax finance can attain about as much productivity as a social planner with centralized finance can, even if the social planner is armed with more information that a real social planner could plausibly have. The key insight is that decentralized Tiebout choices make some information the social planner would need verifiable and other information unnecessary.

download in pdf format
   (283 K)

email paper

This paper is available as PDF (283 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w6911

Published: Journal of Public Economics (1999).

Users who downloaded this paper also downloaded these:
Hoxby w7867 Peer Effects in the Classroom: Learning from Gender and Race Variation
Hoxby w4979 Does Competition Among Public Schools Benefit Students and Taxpayers?
Hoxby w4978 Do Private Schools Provide Competition for Public Schools?
Hoxby w8873 School Choice and School Productivity (or Could School Choice be a Tide that Lifts All Boats?)
Bayer and McMillan w11802 Choice and Competition in Local Education Markets
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us