Cynthia L. Rogers

A study of quasi-experimental control group methods for estimating policy impacts

Abstract This study examines the efficacy of quasi-experimental control group (QECG) methods for estimating policy impacts. It establishes that QECG estimators can outperform the conventional regression (CR) estimator when policy adoption is endogenous (nonrandom), the relationship between outcomes and policies is nonlinear, and CR equations do not correctly specify the nonlinear form of the relationship. In the case of perfect matching, QECG methods produce unbiased estimates. In the case of imperfect matching, QECG estimators will be biased. To address this and other issues, we develop a more general QECG estimator that (1) allows control places to be matched to more than one treatment place, and (2) weights observations by the “closeness” of the match. Using Monte Carlo analysis we demonstrate that our estimator substantially improves estimates of policy impacts.

Tax Cuts and Employment in New Jersey: Lessons From a Regional Analysis

The Whitman administration’s 30% reduction in New Jersey’s personal income taxes from 1994 to 1996 is prominently cited as a role model for state fiscal policy. The authors investigate whether the growth benefits attributed to the Whitman tax cuts are warranted. Panel data methods are applied to annual observations of county-level employment growth fromNew Jersey and the surrounding economic region. This study’s analysis does not support the hypothesis that tax cuts stimulated employment growth in New Jersey. Although New Jersey did experience substantial employment growth subsequent to the tax cuts, most of this growth was shared by the nearby Economic Areas.

Leaders, Followers, and Asymmetric Local Tax Policy Diffusion

Complementing recent theoretical models of tax competition with endogenous leadership, we empirically model local policy diffusion as a dynamic asymmetric process. Using a setting where local option sales taxes rapidly transitioned from nonexistence to ubiquity, we construct a policy leadership index to classify jurisdictions as leaders or followers. Using models that control for vertical tax competition effects, we show how asymmetric leader–follower dynamics characterize horizontal tax competition over the three decades that follow. A placebo test further supports our main conclusions. This methodological approach could be adapted to other settings where policies exhibit both extensive and intensive margins.

Are Tax Havens Good Neighbours? FDI Spillovers and Developing Countries

Abstract This paper investigates the impact of tax havens on non-tax haven countries in terms of foreign direct investment (FDI). We analyze the importance of agglomeration effects by including FDI inflow levels in tax havens and capture geographic spillovers by measuring proximity to the nearest tax haven. Our analysis yields several interesting findings. First, using panel data for 142 countries, we find evidence of positive spillovers from tax havens to nearby developing countries, but not to nearby developed countries. Second, restricting our panel to developing countries, we find the positive effect of tax haven FDI on developing countries to be robust. Third, we find that geographic distance matters for financial flows: developing countries which are the closest to a nearby tax haven benefit the most in terms of FDI inflows. This result is robust to accounting for spatial interdependence of FDI.

Does Voter Turnout Influence School Bond Elections

This article investigates the role of voter turnout in school bond election outcomes. It is widely believed that turnout is negatively related to bond approval rates. Conclusions from previous empirical research, however, may be misleading because many sociodemographic factors and election parameters that influence bond support are also likely to influence voter turnout decisions. To account for the endogeneity of turnout, we employ an instrumental variable approach. We find that the persistent part of voter turnout plays a negligible role in explaining bond approval shares conditioned on election timing, past voting behavior, and district characteristics. Using first-difference models, change in turnout has a negative and significant influence on change in approval share and probability of bond success. Our results support previous research and suggest that targeted voter mobilization strategies have the potential to influence school bond outcomes.

Competition between Tax Havens: Does Proximity Matter?

We study whether proximity to the nearest tax haven affects FDI and the number of American affiliates in a tax haven. Our results show that distance to the nearest tax haven is positively related to FDI inflows and the number of American affiliates in tax havens. These findings suggest that there is harmful competition between tax havens. We also find evidence of positive spillovers: the number of American affiliates in a tax haven is positively related to the number of affiliates in its closest neighboring tax haven. This suggests the presence of agglomeration benefits given there is an affiliate in a nearby tax haven.

Are Tax Havens Good Neighbors? An LDC Perspective

Tax competition and spillover models offer ambiguous predictions of tax haven impacts on non-tax havens. The implications of tax havens for less developed countries (LDCs), in particular, are not well understood and are little studied. This paper investigates the impact of tax havens on foreign direct investment (FDI) in non-tax haven LDCs. We investigate spillover and agglomeration factors by including measures of proximity to the nearest tax haven and the level of FDI inflows in the nearest tax haven. Employing cross sectional data of 115 LDCs from 1990 to 2006, we find evidence of spillovers from tax havens to nearby LDCs. FDI inflows in LDCs are positively and significantly related to FDI inflows in the nearest tax haven. Geographic diffusion has nuanced effects. LDCs at a medium distance to the nearest tax haven have higher levels of FDI than LDCs that are close to a tax haven. On the other hand, LDCs at a medium distance to a tax haven are less influenced by FDI spillovers compared with LDCs at closer proximity. Taken together, our results suggest that tax havens make good regional neighbors, but not good immediate neighbors for LDCs. These findings are robust to several model specifications, including one with spatially correlated error terms..

Trust and Patience after a Tornado

AbstractThis study examines how individuals’ trust levels and patience are affected by a tornado event. Affected and unaffected people were surveyed after a 2013 tornado in Moore, Oklahoma, that resulted in 24 fatalities. Findings suggest that those who self-identified as affected became more trusting in general as well as more trusting of police and fire authorities. Affected homeowners also exhibited less patience than their unaffected counterparts. The evaluation of differences in trust and patience enables us to learn about how underlying propensities to invest (or reinvest) in critical private and public infrastructure may be influenced by extreme events. Disasters alter trust levels and patience of affected residents, and documenting the direction and magnitude of these changes may help agencies involved in the recovery process.

Do State Sales Taxes Crowd Out Local Option Sales Taxes

Abstract Currently, sales taxes are imposed at both the state and local levels in 37 US states. In these environments, vertical tax competition occurs as governments share a common sales tax base, and local jurisdictions have autonomy over sales tax rates. As cash-strapped states look to sales taxes for additional revenues, local governments may worry about potentially adverse revenue impacts, as consumers react to combined tax rate increases. This study examines state-municipal and county-municipal fiscal spillovers using an empirical approach that accounts for endogenous tax policy leadership and voter tax fatigue. Employing comprehensive longitudinal data from Oklahoma, we find that state tax hikes significantly crowd out future rate increases for the large group of jurisdictions that are designated as followers. Leader jurisdictions are not found to display crowd-out tendencies, a result that is consistent with recent work suggesting that leaders may be less influenced by vertical fiscal externalities than other jurisdictions.

Competition between Tax Havens: Does Geographic Distribution Matter?

We investigate competition between tax havens and how this competition is related to geographic distribution. We study the extent to which proximity to the nearest tax haven affects foreign direct investment and the number of American affiliates in a tax haven. Empirical results show that distance to the nearest tax haven is positively related to FDI inflows and the number of American affiliates in tax havens. These findings suggest that tax havens compete with each other in a potentially harmful manner. Interestingly, we also find evidence of positive spillovers: the number of American affiliates in a tax haven and its closest tax haven neighbor is positively related. This finding suggests that agglomeration benefits are important for firms and that the nature of the competition between tax havens changes once there is a subsidiary in the nearby tax haven.