Research

Working Papers

"This Town Ain't Big Enough? Quantifying Public Goods Spillovers" (Job Market Paper), w/ Aurélie Sotura

Despite long-standing theoretical interest, empirical attempts at investigating the appropriate level of decentralization remain scarce. This paper develops a simple and flexible framework to test for the presence of public good spillovers between fiscally autonomous jurisdictions and to investigate potential welfare gains from marginal fiscal integration. We build a quantitative spatial equilibrium model of cities with mobile households and endogenous local public goods causing spillovers across jurisdictional boundaries. We show how one can exploit migration and house price responses to shocks in local public goods at different geographic scales to reveal the intensity of spillovers. Applying our framework to the particularly fragmented French institutional setting, we structurally estimate the model using a unique combination of administrative panel datasets on cities. Estimation relies on plausibly exogenous variations in government subsidies to instrument changes in the supply of local public goods. We find that public spending in a municipality accounts for 4-11% of the local public good bundle enjoyed by its residents, and that public spending in each neighbor municipality accounts for an average 3.2-3.5% of this bundle. Finally, we simulate the effect of a reform increasing fiscal integration and find substantial welfare gains.

"Optimal Spatial Policies with Public Goods and Unobserved Location Preferences" (draft coming soon), w/ Benjamin Carantino

We study the welfare implications of the interplay between public good agglomeration economies and heterogeneous location preferences in an economic geography framework. Using data on French cities, we first present new stylized facts suggesting scale economies in the consumption of local public goods. We then build a spatial equilibrium model with mobile workers and endogenous public goods and characterize the transfers implementing efficient population distribution. We show that heterogeneity in location preferences increases the equity cost of migration (transfers) relatively to its efficiency benefits (agglomeration gains) such that Pareto-improving reforms may not always exist. Investigating the Pareto efficiency of current French transfers, we empirically show that ignoring location preferences leads to recommending reforms that mistakenly redistribute towards the densest and richest places. Finally, we argue that the interaction between public good scale economies and location preferences may raise horizontal equity concerns about public good consumption, and find evidence that the French planner compensates low-density areas beyond a utilitarian objective.

"The Dead-Weight Loss of Property Transaction Taxes" (draft coming soon), sole-authored

This paper studies the impact of transaction taxes in the property market. I use a unique administrative dataset covering all property transactions in France over 2010-2016 and exploit quasi-experimental variations provided by a 2014 reform that increased stamp duties. I first document that tax changes were salient and led to significant re-timing responses. Exploiting spatial differences in the timing of tax increases, I then use a synthetic control method to investigate extensive responses and estimate a net tax elasticity in the range [0.22, 0.25]. I find no effect on transaction prices nor house quality, suggesting that the supply of existing homes may be very elastic. I propose an alternative mechanism in a search model in which tax increases may upgrade average match surplus and push bargained prices up by discouraging buyers with low reservation values. This improved matching efficiency may positively contribute to welfare.