Welfare Competition in Norway

Local redistribution policy creates incentives for welfare migration that may result in 'underprovision' or even a 'race to the bottom'. This paper evaluates the empirical importance of welfare competition. Our contribution is to separate between the policy decision and the actual welfare benefit payments and to introduce income distribution as a determinant of welfare policy. Utilizing spatial econometric methods we find statistical significant strategic interaction between local governments for both the welfare benefit norm decided by the local council and the expected welfare benefits of a standardized person. No robust relationship is found between inequality and welfare benefits and thus we offer no strong support for the Romer-Meltzer-Richard hypothesis. We conclude that there is a geographic pattern in welfare benefits. This does not necessarily imply underprovision, since the grant financing of the local governments may generate overall excessive public spending.

Decentralization with Property Taxation to Improve Incentives: Evidence from Local Governments’ Discrete Choice

Decentralization of government with property tax financing is the standard recipe for public sector reform. Fiscal competition is assumed to stimulate efficiency and hold down the tax level. Property taxation offers additional incentives for efficiency. We study the incentive mechanisms involved using data for decentralized governments and in a setting where they can choose to have property taxation or not. The empirical analysis addresses whether fiscal competition and political control problems influence the choice of having property taxation. The results indicate that both incentive mechanisms are relevant and consequently support the standard advice. Fiscal competition generates a distinct geographic pattern in local taxation and political fragmentation seems to motivate property taxation to control common pool problems. The main methodological challenge handled concerns spatial interaction with discrete choice.property taxation; fiscal competition; political fragmentation; Bayesian analysis; spatial autoregressive model

Property Taxation as a Determinant of School District Efficiency

Recent theoretical contributions have emphasized the favorable incentive effects of property taxation. The object of this paper is to confront these theories with Norwegian data on student performance. The institutional setting in Norway is well suited to analyzing the effects of property taxation because we can compare school districts with and without property taxation. In addition, we focus on an alternative incentive mechanism - competition between school districts. The empirical results indicate that students in school districts that levy residential property taxes perform better at the national examination than students in comparable school districts. Strategic interaction in school quality is present, but the magnitude of the interaction effect is modest.Student achievement;efficiency;property taxation;competition;spatial auto-regressive model

Sentral finansiering av lokal offentlig tjenesteproduksjon: Bailout-problemet

Artikkelen er gjengitt med tillatelse fra Samfunnsøkonomenes Forening.Viktige velferdstjenester er i de fleste land desentralisert til et lokalt styringsnivå og delvis finansiert gjennom overføringer fra sentrale myndigheter. Sterk avhengighet av overføringer fra sentrale myndigheter kan imidlertid være uheldig siden insentivene til fiskal disiplin på det lokale nivå svekkes. Konsekvensen kan bli strategisk underskuddsbudsjettering fra lokale myndigheter i håp om at de på et senere tidspunkt vil bli reddet fra finansielle vanskeligheter av sentrale myndigheter i form av en bailout. I valg av institusjoner blir utfordringen å finne løsninger som i minst mulig grad gir insentiver til opportunistisk atferd fra lokale myndigheter. I denne artikkelen beskriver jeg bailout-spillet og med utgangspunkt i litteraturen om tidsinkonsistens i økonomisk politikk diskuterer jeg mekanismer som kan redusere sannsynligheten for at et slikt spill oppstår

The Incentive effects of property taxation: Evidence from Norwegian school districts

Abstract: Recent theoretical contributions indicate favorable incentive effects of property taxation on public service providers. The object of this paper is to confront these theories with data from Norwegian school districts. The institutional setting in Norway is well suited for analyzing the effects of property taxation because one can compare school districts with and without property taxation. To take into account potential endogeneity of the choice of implementing property taxation, we rely on instrumental variable techniques. The empirical results indicate that, conditional on resource use, property taxation improves school quality measured as students’ result on the national examination. Keywords: Property taxation; Disciplining device; Public sector qualit

Does welfare policy affect residential choices? : evidence from a natural experiment

Abstract: This paper studies how changes in welfare benefit levels affect welfare recipients’ residential choices. Although several empirical studies have stressed that welfare policy may affect residential choices of welfare recipients, few studies have simultaneously taken into account that residential choices of welfare recipients also affect welfare policy. The main contribution of this paper is to address this policy endogeneity by utilizing a policy reform as a natural experiment. The results show that welfare policy exerts a nontrivial effect on residential choices of welfare recipients. Moreover, I show that ignoring the policy endogeneity may give rise to a downward bias in the estimated migration responses. Keywords: Welfare Benefits, Migration, Policy Endogeneit

Does welfare policy affect residential choices? : evidence from a natural experiment

Abstract: This paper studies how changes in welfare benefit levels affect welfare recipients’ residential choices. Although several empirical studies have stressed that welfare policy may affect residential choices of welfare recipients, few studies have simultaneously taken into account that residential choices of welfare recipients also affect welfare policy. The main contribution of this paper is to address this policy endogeneity by utilizing a policy reform as a natural experiment. The results show that welfare policy exerts a nontrivial effect on residential choices of welfare recipients. Moreover, I show that ignoring the policy endogeneity may give rise to a downward bias in the estimated migration responses. Keywords: Welfare Benefits, Migration, Policy Endogeneit

Resultatindikatorer i høyere utdanning : studiepoeng, grader på normert tid og arbeidsmarkedsutfall

Ved bruk av materiale fra denne publikasjonen, skal Statistisk sentralbyrå oppgis som kilde.Formålet med denne rapporten er å drøfte ulike resultatindikatorer for høyere utdanningsinstitusjoner i Norge, som kan beregnes ut fra data som er tilgjengelige på institusjonsnivå. Spørsmålet er hvorvidt disse resultatindikatorene – eller mer presist forskjeller i resultatindikatorer mellom utdanningsinstitusjoner – sier noe om faktiske forskjeller mellom institusjonene i forhold til i hvilken grad de bidrar til studentenes læringsutbytte

Property Taxation as a Determinant of School District Efficiency

Recent theoretical contributions have emphasized the favorable incentive effects of property taxation. The object of this paper is to confront these theories with norwegian data on student performance. The institutional setting in Norway is well suited to analyzing the effects of property taxation because we can compare school districts with and without property taxation. In addition, we focus on an alternative incentive mechanism – competition between school districts. The empirical results indicate that students in school districts that levy residential property taxes perform better at the national examination than students in comparable school districts. Strategic interaction in school quality is present, but the magnitude of the interaction effect is modest

Electoral Reform and Strategic Coordination

Electoral reform creates new strategic coordination incentives for voters and elites, but endogeneity problems make such effects hard to identify. This article addresses this issue by investigating an extraordinary dataset, from the introduction of proportional representation (PR) in Norway in 1919, which permits the measurement of parties’ vote shares in pre-reform single-member districts and in the same geographic units in the post-reform multi-member districts. The electoral reform had an immediate effect on the fragmentation of the party system, due in part to strategic party entry. The authors find, though, that another main effect of the reform was that many voters switched between existing parties, particularly between the Liberals and Conservatives, as the incentives for these voters to coordinate against Labor were removed by the introduction of PR