Handbook of Public Economics, Vol. 5

Chapter 4

Urban Public Finance

Edward L. Glaeser,    Harvard University and National Bureau of Economic Research, Cambridge, MA, USA

Abstract

America’s local governments spend about one-eighth of our national income, one-fourth of total government spending, and employ over 14 million people. This paper surveys the large and growing economics literature on local governments and their finances. A primary difference between local and national government is the ease of labor mobility within countries, which disciplines local governments and means that heterogeneous service levels can be beneficial, but mobility also challenges local attempts at redistribution. The empirical literature on mobility responses to local government is distinguished, but ...