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Essays In Public Finance
|dc.description.abstract||In Chapter 2, I develop a basic model of housing prices, in which the level of capitalization depends positively on the absolute value of the elasticity of demand, and negatively on the elasticity of supply and the level of housing demand growth. Using 2001 [-] 2009 annual public pension asset and liability data from the Boston College Center for Retirement Research, I test the implications of the model. I measure the extent to which unfunded public pension liabilities are capitalized into housing prices, and test whether states with higher housing demand growth experience less capitalization. Instrumenting for unfunded liabilities using initial asset class levels adjusted for average market returns, I find that a one dollar per household increase in unfunded pension liabilities corresponds to a six and a half dollar decrease in average housing prices. In addition, I find that states which experience faster future household growth experience less capitalization. Chapter 3 outlines a new argument for the use of tax credits for contributions to the public good: that tax credits for contributions to the public good can reduce tax avoidance. Specifically, I develop a simple model with non-labor distorting taxes in which the introduction of tax credits for voluntary contributions to the public good can completely eliminate tax avoidance and allow the social planner to implement the first-best level of the public good. This result is robust to a number of extensions, including the introduction of warm-glow preferences. I also show that when labor-distorting taxes are used to finance the public good, the introduction of tax credits for contributions to the public good can eliminate tax avoidance and decrease the labor wedge. Chapter 4 outlines an explanation for the relative generosity of deferred public sector compensation relative to deferred private sector compensation. Using a basic political economy model, I demonstrate that the preferences of the median public sector employee can lead to policies which favor increases in defined benefit pensions over either increases in salary or decreases in employee contributions towards their pensions. In this chapter, I present a simple model in which the current median public sector employee determines how to accept a given increase in the present value of employer pension contributions: through either decreased employee contributions or through increased pension benefits. I demonstrate that if the discount rate is sufficiently small, then the present value of increased future pension benefits exceeds the present value of the decrease in employee pension contributions for the median public employee, and the median public employee will thus prefer a pension benefit increase over a decrease in employee contributions. In addition, I demonstrate that under a wide range of plausible parameters, the median public employee will prefer benefit increases over employee contribution cuts.|
|dc.title||Essays In Public Finance|
|dc.type||dissertation or thesis|
|thesis.degree.level||Doctor of Philosophy|
|thesis.degree.name||Ph. D., Economics|