Impact of Property Taxes and Public Education Outlays on Housing Costs: Recent Empirical Evidence

By Cebula, Richard J. | Journal of Global Business Issues, Winter 2008 | Go to article overview

Impact of Property Taxes and Public Education Outlays on Housing Costs: Recent Empirical Evidence


Cebula, Richard J., Journal of Global Business Issues


ABSTRACT

This empirical study investigates the impact of property taxes, public education outlays, and other factors on interstate differentials in the cost of housing. While the literature on geographic cost-of-living differentials is well developed, the literature on geographic cost-of-housing differentials is much less so Housing costs consist of the price of housing per se for owners (including maintenance and repairs) or rental payments per se for renters .Relevance of this research is elevated by the fact that the cost of housing is the main driver of cost-of-living differences between states. OLS results imply that the cost of housing is positively a function of median family income, miles of shoreline, and the mean January temperature, and negatively a function of toxic waste releases and the presence of right-to-work laws. Finally, it is found that property taxes are capitalized into housing prices, thereby lowering those prices and the overall cost of housing, as it is narrowly defined, whereas there is modest evidence that public education outlays may also be capitalized into housing prices, thereby elevating the cost of housing.

INTRODUCTION

Determinants of geographic living-cost differentials (L-CDs) in the U.S has attracted the interest of a large number of researchers, including Cebula (1980, 1989), Cebula & Todd (2004), Cobas (1978), Ostrosky (1983), McMahon (1991), Nord (2000), and Kurre (2003). The study of geographic L-CDs is of interest given that such differentials have consistently been found to be significant in explaining geographic mobility in the U.S. (Renas, 1978, 1983; Cebula, 1978, 1993; Cebula & Alexander, 2006; Ashby, 2007). Most of the published L-CD related research to date has tended to focus on states, metropolitan areas, or counties.

Less well developed is the literature on interstate housing-cost differentials per se. Based on the database adopted in this study, housing costs consists of two components: (1) the housing price (for homeowners), inclusive of home maintenance and repair costs, and (2) the housing price for renters, i.e., rent per se. Outlays on residential housing constitute approximately 40 percent of total expenditures by households. As Ashby (2007, p. 686) observes, "...housing...is the main driver of cost-of-living differences between states." Hence, improved knowledge of determinants of housing-cost differentials per se may shed at least indirect light on the underlying causes of interstate living-cost differentials. Accordingly, the objective of this study is to identify determinants of interstate differentials in the cost of housing (as defined). This study focuses on interstate housing-cost differentials for the year 2006.

THE CONTEXT

The analysis adopts state-level data, with Washington, D.C. being excluded. To begin the development of the framework for the analysis, it is hypothesized that the higher the median family income (MFI^sub j^), the greater the overall demand for housing and hence the higher the overall level of housing prices and rents, ceteris paribus. Hence, the overall cost of housing in state j, COHj, is expected to be an increasing function of MFI^sub j^, ceteris paribis. In principle, this argument is consistent with previous research (Cebula & Todd, 2004; Cobas, 1978; Ostrosky, 1983; Kurre, 2003) that has found that the average overall price level in a regional economy responds positively to an increase in per capita income, the effects of which are transmitted to regional price levels through an increase in the overall demand for goods and services.

The housing prices (and rent levels) comprising the overall cost of housing, COH, are likely to be significantly influenced by environmental considerations. To begin, the roles of a more favorable climate and/or other positive environmental amenities have been shown to be determinants of migration that may be capitalized in housing prices (Cebula, 1978; Cebula & Alexander, 2006). …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Impact of Property Taxes and Public Education Outlays on Housing Costs: Recent Empirical Evidence
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.