The Marginal Value of Public Pension Wealth: Evidence from Border House Prices
We study effects of state pension windfalls on property prices near state borders, where theory suggests real estate reflects the value of additional public resources. Windfalls have grown to half the size of total state tax revenues and provide plausibly well-identified variation in fiscal conditions. We find one dollar of exogenous variation in pension asset returns increases border house prices by approximately two dollars. These estimates suggest governments, rather than wasting incremental resources, allocate additional funds towards high value projects or tax abatement. Evidence of larger effects in financially constrained municipalities highlight how fiscal resources amplify welfare effects of economic shocks.
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Copy CitationDarren Aiello, Asaf Bernstein, Mahyar Kargar, Ryan Lewis, and Michael Schwert, "The Marginal Value of Public Pension Wealth: Evidence from Border House Prices," NBER Working Paper 29405 (2021), https://doi.org/10.3386/w29405.Download Citation
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Published Versions
Aiello, Darren & Bernstein, Asaf & Kargar, Mahyar & Lewis, Ryan & Schwert, Michael, 2025. "The marginal value of public pension wealth: Evidence from border house prices," Journal of Financial Economics, Elsevier, vol. 172(C), DOI: 10.1016/j.jfineco.2025.104134. citation courtesy of 
Darren Aiello & Asaf Bernstein & Mahyar Kargar & Ryan Lewis & Michael Schwert, 2025. "The marginal value of public pension wealth: Evidence from border house prices," Journal of Financial Economics, vol 172.
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