The welfare implications of political and economic decentralization
The mobility of businesses and households poses a challenge to state and local governments. I explore the implications of locational patterns and effectiveness, in theory and practice, of subnational governments in fulfilling their assigned responsibilities. Chapter One. Using a Hecksher Ohlin framework with increasing returns to scale, I examine the benefits of industrial agglomeration. Four potential equilibria are shown to exist. They are total specialization, mixed production in both regions, and two equilibria with one of two regions specializing, in one case in the increasing returns industry, in the other case in the constant; returns industry. The four are compared for return on capital, total land rent, and utility of worker-renters, which is assumed to be equal across the two regions. Agglomeration is shown to increase returns to capital. The effect on the wage rent ratio is shown to depend on parameters. Restrictions on the ratio of the area of the regions are required for existence of the specialized equilibria. Chapter Two. With income redistribution as its sole function, a metropolitan government is compared with a system of two local governments. Distortion in the location decision is shown to exist in the local redistribution regime. The economy modeled is composed of high and low wage renters who work at the center of the monocentric metropolitan area, and land owners whose utility is measured in rent. Criteria are established for the improvement of the utility of the high and low wage households in the move from local to metropolitan redistribution. The changes in housing prices and land rents are also studied. Conditions for the increase in rents and improvement in utility of high and low wage households are found to be compatible. A Pareto improvement is shown to be a possibility. Chapter Three. State public employee pension plan finding levels are measured, reported, and compared. Time series tests find that states in general do work to reduce the debt level of underfunded plans. Differences in state behavior toward pension debt are shown to be related to state pension and employment laws and the political character of a state.
|Year of publication:||
|Authors:||Mark, Stephen Thomas|
|Type of publication:||Other|
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Persistent link: https://www.econbiz.de/10009439019
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