Academic Commons

Theses Doctoral

Essays in political economy and public finance

Ash, Elliott Thomas

This dissertation consists of three research articles in political economy and public finance.
The first chapter provides evidence on the effect of electoral institutions on the performance of public officials. Using panel data on state supreme courts between 1947 and 1994, we measure the effects of changes in judicial electoral processes on judge work quality -- as measured by citations by later judges. Judges selected by non-partisan elections write higher-quality opinions than judges selected by partisan elections. Judges selected by technocratic merit commissions write higher-quality opinions than either partisan-elected judges or non-partisan-elected judges. Election-year politics reduces judicial performance in both partisan and non-partisan election systems. Giving stronger tenure to non-partisan-selected judges improves performance, while giving stronger tenure to partisan-selected judges has no effect. These results are consistent with the view that technocratic merit commissions have better information about the quality of candidates than voters, and that political bias can reduce the quality of elected officials.
The second chapter contributes to recent work in political economy and public finance that focuses on how details of the tax code, rather than tax rates, are used to implement redistributive fiscal policies. I use tools from natural language processing to construct a high-dimensional representation of tax code changes from the text of 1.6 million statutes enacted by state legislatures since 1963. A data-driven approach is taken to recover the effective tax code – the set of legal phrases in tax law that have the largest impact on revenues, holding major tax rates constant. Exogenous variation in tax legislation from judicial districts is used to capture revenue impacts that are solely due to changes in the tax code language, with the resulting phrases providing a robust out-of-sample predictor of tax collections. I then test whether political parties differ in patterns of effective tax code changes when they control state government. Relative to Republicans, Democrats use revenue-increasing language for income taxes but use revenue-decreasing language for sales taxes – consistent with a more redistributive fiscal policy – despite making no changes on average to statutory tax rates. These results are consistent with the view that due to their relative salience, changing tax rates is politically more difficult than changing the tax code.
The third chapter reports evidence on the potential benefits to local labor markets of increasing property taxes as a source of local government revenue. The data come from three states (308 tax districts, 16 years) where tax districts reassess properties on a state-mandated staggered cycle, resulting in exogenous variation in assessments and accompanying taxes. I find that an increase in taxes due to random assessment causes economic expansion, with an increase in local population and the number of local business establishments. These effects appear to be driven by increases in government revenues and expenditures, rather than by changes in borrowing behavior. These results suggests that property taxes are too low in this sample of states.

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More About This Work

Academic Units
Economics
Thesis Advisors
MacLeod, William Bentley
Degree
Ph.D., Columbia University
Published Here
April 29, 2016
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