In principle, business public services should also be included; however, they are not
This area is not identical to the present Metropolitan Statistical Area as defined by the US Department of Commerce; rather, it is the former SMSA area that continues to be used by
local government-related planning agencies.
We say 'roughly' because some data were available only for the Census years 1979 and 1989, or for the fiscal years 1981 and 1991,
We did this by overlaying maps of each type of jurisdiction upon that of the municipality in
question. The fraction of a municipality's tax base that was subject to the property tax levy
of an overlapping jurisdiction of a particular type (for example, school district) was assumed
to equal the fraction of municipal land area accounted for by that particular jurisdiction. A
detailed description of the methodology and the data themselves will appear in a forthcoming working paper, 'Does business development raise taxes? An empirical analysis of Chicago's suburbs', Federal Reserve Bank of Chicago, working paper, 1995.
This measure differs from the statutory rate of tax because, by convention, the assessed
value of housing for tax purposes is but a fraction of its market value. Moreover, this ratio
may vary from community to community.
This probably understates the implied elasticity because of the use of the terminal value of
business assessed property in computing the growth of business.
The change in tax price was not included in the regression because these effects would be
subsumed by the growth of business and population variables. Thus the coefficients on the
latter include tax price change effects on expenditures.
To be consistent with our finding for effective tax rates on housing, it must mean that the
ratio of housing value to income rises with employment growth; but this is just the
opposite of what one would expect on quality-of-environment grounds.
Neighbouring employment is defined as employment in communities located within five
miles of the community in question.
We also tested for a relationship between own employment growth and neighbouring
employment growth but found no relationship.
However, we did find that those communities most developed at the beginning of the
period enjoyed less price appreciation over the period. This offers some support for the
position that business activity creates negative disamenities.
Bartik, Timothy ( 1991), "The effects of property taxes and other local public fiscal
policies on the intrametropolitan pattern of business location", in Industry Location
and Public Policy,
Henry W. Herzog, Jr and
Alan Schlottmann (eds), Knoxville: The University of Tennessee Press.
Steve Lake and
John Bush ( 1987), "Saturn and state
economic development", Forum for Applied Research and Public Policy, 2, 29-40.
Burchell, Robert W. and
David Listokin ( 1993), The Development Impact Assessment
Handbook and Model, Cambridge, MA: Urban Land Institute.
Carlino, Gerald and
Edwin Mills ( 1985), Do public policies affect county growth,
Business Review, Federal Reserve Bank of Philadelphia, July/August, 3-16.
Danielson, Michael N. and
Julian Wolpert ( 1991), "Distributing the benefits of regional economic development", Urban Studies, 28 ( 3), 393-413.
Danielson, Michael N. and
Julian Wolpert ( 1992), "Rapid metropolitan growth and
community disparities", Growth and Change, Fall, 494-515.
DuPage County Development Department Planning Division ( 1991), Impacts of Development on DuPage County Property Taxes, prepared for the DuPage County
Regional Planning Commission, 9 October.