Takahisa Yokoi (p)

Dylan Jong

Local governments in Japan set upper limits on the allowable floor-area-ratio (FAR) with the aim of controlling population growth and externalities. The FAR limit has been treated as a variable in empirical models of real estate prices in Japan. A low-enough value of the maximum acceptable FAR necessitates low building heights, but beyond a certain value it does not have any direct effect on the actual heights of buildings. There are, however, indirect (negative) effects on real estate prices from possible tall buildings in the surroundings. Our hypothesis is that the mechanism by which the FAR control affects real estate prices depends on the relation between the privately determined optimal FAR and the regulatory FAR values. To test this hypothesis, we conduct an empirical research using a real estate transaction price datasets from the Ministry of Land, Infrastructure and Transport. First, each sample is divided into two subsets. In one, the regulation constrains the actual heights. In the other, it does not. The percentage of constrained heights in a municipality reflects the local public policy on population growth. Estimation of spatial econometric models measures strategic interdependence among neighboring municipalities on height regulation. Next, we estimate an optimal FAR function using constrained samples. This estimated function is used to predict the population changes caused by changes in FAR regulation. It also provides a guideline as to whether the FAR limit should be treated as an explanatory factor in models of land price. Finally, we simulate the urban population level without FAR regulations. In other words, we can confirm how much the population concentration in Japanese cities is suppressed by FAR regulation.

Dylan Jong (p), Philip McCann, Viktor Venhorst

Benedikt Herrmann

This paper examines the economic growth effects of the local public fiscal composition. New data allows for an extensive analysis on the local economic growth effects of over 100 revenue and expenditure categories in United States cities, with a further distinction between capital outlay and current operations expenditures. The data also presents a solution to the local fiscal comparability issue. Furthermore, by focusing on the complete local public fiscal composition of cities, this paper considers the constrained choice set policy makers face. Results show that local public revenues are only distortionary when used to fund non-productive expenditures. When used to fund productive expenditures, increased revenues may enhance economic growth. Relatively productive expenditures are public welfare, highways, utilities, and commercial activities. Unproductive expenditures are public safety, health, parks & recreation, public buildings and interest on general debt.

Henri L.F. de Groot (p), Thomas de Graaff, Yashvant Premchand

Arthur Grimes

Throughout Europe, starters on the housing market are struggling to find affordable houses. An important part of the problem is to find the financial resources that are required to finance the public investments in, for example, local infrastructure, public facilities such as libraries, etc. This results in lack of construction of new housing stock. At the same time, we know that land values vary widely within countries, within regions and even within cities. And with growing cities and their associated urban externalities, land values tend to increase sharply, yielding large rent-surpluses for those who already own the land and remaining unexploited for the financing of necessary public goods. Those increases in land values may also lead to disincentives for construction of new housing as expected future profits are higher. This paper assesses what the effects are of the difference in public and private land ownership on both housing prices and newly built housing stock, where we aim to tease out the negative effect of both local taxation and larger housing supply on housing prices on the one hand and the positive effects of local public investments on the other hand. Preliminary results for the Netherlands point to lower prices and more new housing for those municipalities that are active on the land market and publicly invest in future housing plots; investments which can be recuperated using, for example, lease hold constructions.

Ioannis (Yannis) Psycharis (p)

Arthur Grimes

Geographical aspects of income inequality represents one of the most flourishing and rapidly expanding field of scientific research in social sciences. However, while much research has been devoted to the examination of income inequalities across space, relatively limited attention has been given to the geographical aspects of tax burden.
The aim of this paper is to explore the geographical incidence of tax burden in Greece. Based on individualized tax declarations data over the period 2002-2029 this research provides a novel estimation of Gini coefficient of for personal tax burden inequality across different sub-sets of geographical space.
Results show that the geographical incidence of tax burden provides large heterogeneity across space. Different groups of tax payers such as employees or freelancers, provide different geographies of tax burden. Though the use of thematic cartography maps the paper provides a panoramic overview of the geography of tax burden of the regions. The paper also is making an estimation of the index if geographical progressivity in order to explore the dynamics and variations of progressivity of tax burden across space. Results are relevant to regional and fiscal policy in order to shed light in one of the less known issues in Regional and Public Economics and also to help policy makers making the appropriate adjustment in order to implement fairer distribution of tax burden across space, among income groups, over time.