Award Year

2008

Award Type

First Prize

Dissertation Advisor

David Card and Emmanuel Saez

Abstract

Most national governments exercise sovereignty over large geographic areas, comprising a multitude of economically diverse cities and politically heterogeneous regions. Unlike local governments, which typically must spend revenues in the same area in which they are raised, national governments face no such constraints and can effectively redistribute funds from one area to another by letting some areas receive more spending, net of taxes, than others. While an enormous literature has studied the causes and consequences of taxation and spending at the purely national and purely local levels, surprisingly little research has examined how or why national governments may tax and spend differently across different areas.

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