Allocative inefficiency and local government

Article Abstract:

J.K. Brueckner was able to show that the hedonic estimates of property values can be employed to examine the allocative efficiency of local government. However, the application of his technique using data on multiple labor markets within a given state led to inconsistent findings. This was because governmental amenities might have been capitalized into wage differentials instead of property values. To avoid this mistake, Brueckner's approach is applied to data on a single labor market. This sidesteps the possibility of wage differentials that may have given rise to specification error in prior studies. Findings The cross-sectional analysis utilizes spatial correlation techniques as a way to control for any benefit spillovers. Results imply that local governments do not overprovide public services in a systematic manner and may underprovide highway services.

Research, Local government, Resource allocation

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Local public sector bureaucrats and their input choices

Article Abstract:

The utility-maximizing behavior of bureaucrats is tested using data from several Illinois municipalities. The hypothesis holds that bureaucrats' utility functions cause them to make resource allocation choices that are inconsistent with public welfare objectives and cost minimization principles. The model uses a Shephard-type distance function and dual lemma to estimate shadow prices for the inputs used in a public bureaucracy. Comparison with actual input prices shows cost minimization is violated. The actual price for labor inputs is lower than the estimated shadow price, indicating an overemployment of labor relative to capital in the central city municipalities. The opposite finding was obtained for suburban and rural municipalities.

Economic aspects, Bureaucracy, Public sector

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On the determinants of school district efficiency: competition and monitoring

Article Abstract:

Research shows that allowing voters access to school information improves the performance of the school. Increasing competition for public schools with voucher programs may increase school efficiency, but lack of competition does not reduce school efficiency.

United States, Statistical Data Included, Analysis, Competition (Economics), Finance, Accounting and auditing, Education, Schools, Educational vouchers, School accounting

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