Agglomeration, Tax Differentials, and the Mobility of Professional Athletes

Interstate mobility may limit states’ ability to choose their desired tax policies. The forces of agglomeration, however, may allow states more leeway in setting tax rates. Moreover, mobility and agglomeration effects are not uniform for all individuals within a state and may vary significantly across different groups. We explore this heterogeneity by examining the residential location decisions of professional racecar drivers and golfers, which have similar industry characteristics but different levels of agglomeration. Consistent with our theory, we show that tax preferences are a powerful determinant of golfer residential patterns, while agglomeration mitigates much of this effect among racecar drivers. These findings highlight the need to better understand how competition and agglomeration interact when formulating tax policy.

Private Schools and Residential Choices: Accessibility, Mobility, and Welfare

Private schools free households from a strict link between residential location decisions and the tax-school quality bundles they consume. In order to study the impact of private schools on educational outcomes, we develop a general equilibrium model that simultaneously incorporates locational choice built on access and locational choice built on tax-school quality attributes of jurisdictions. We conclude that private school choice enhances the welfare of all households—both those attending private schools and those attending public schools—while also working to reduce the amount of housing and school segregation in equilibrium. Investigation of alternative school policies indicates that greater choice, including using targeted school vouchers, can improve welfare and achievement. Finally, we demonstrate how the fiscal burden arising from some households paying less taxes than they consume in public services varies significantly with the structure of school choice options.

The Role of Employment Subcenters in Residential Location Decisions

In this paper we employ Mecklenburg County, North Carolina, a polycentric city with 10 employment subcenters, as a case study to explore the role of employment subcenters in determining residential location decisions. We estimate discrete choice models of residential location decisions: conditional logit models and heteroscedastic logit models with both the full choice set and sampled choices. We find that access to certain employment subcenters, measured in terms of generalized cost, is an important determinant of households’ residential location decisions. The proximity to specific employment subcenters varies across households with different income levels. These patterns can be explained by existing land use and transportation patterns, as well as by subcenters’ economic specialization.