Date of Award

Summer 8-1-2015

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Dr. Jorge L. Martinez-Vazquez

Second Advisor

Dr. H. Spencer Banzhaf

Third Advisor

Dr. Eric J. Brunner

Fourth Advisor

Dr. Shiferaw Gurmu

Abstract

This dissertation consists of three essays that examine the impact of democratic institutions on policy outcomes. The first essay investigates the impact of direct democracy on redistribution, tax progressivity and income inequality in the American states from 1984 to 2005. Currently available in 24 states, the statewide initiative allows citizens to directly influence policy outcomes. Theoretically, how this political institution impacts inequality and redistribution is ambiguous. Using a pooled OLS specification, I have found that direct democracy leads to an increase in income inequality and a decrease in state tax burden, with no effect on tax progressivity and only modest effect on expenditure redistribution. However, controlling for unobserved heterogeneity using a Correlated Random Effects model, I have found that direct democracy leads to an increase in marginal and average tax rates, with no effect on state tax burden. In their entirety, the findings of this essay underscore that the way in which direct democracy impacts redistribution and inequality is quite complex.

This second essay examines the extent to which fiscal spillovers exist in county governments in California. At the county level in California, many fiscal decisions are made through the use of tax and expenditure referenda. Extant theory suggests that expenditures and revenues of neighboring jurisdictions are interdependent. That is, neighboring jurisdictions incorporate their neighbors’ fiscal choices into their own fiscal decisions. Using spatial econometric analysis and a novel dataset of county expenditures and revenues from 2003 to 2013, I have found strong evidence of fiscal spillovers in California counties. That is, counties respond to what their neighbors do.

The third essay examines the impact of state-mandated alternative education programs for expelled and suspended students on juvenile crime. From 1987 to 2010, fourteen states adopted policies designed to reduce time students spend out of school as punishment by mandating that school districts establish alternative education programs to serve expelled and suspended students. Using difference-in-differences and event study methodologies, I estimate the impact of the state mandate on juvenile crime, finding that state-level juvenile homicide offending rates for black youth aged 12-17 significantly decrease after the implementation of those programs.

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