Doctoral thesis

Fiscal rules, local fiscal policies and households’ mobility

  • 2022

PhD: Università della Svizzera italiana

English This thesis includes three papers of applied research in the field of public finance and households' mobility in the Swiss setting. Chapter 1 is dedicated to the analysis of fiscal rules on fiscal performance, making use of the timely staggered introduction of different balanced budget requirements at the Swiss cantonal level over the past 50 years. Results from a distributed-lag model show that more stringent fiscal rules at the cantonal level improve cantonal surplus through increased revenues, while expenditures are unaffected. Debt stabilizes to a lower level. We rule out that cantonal fiscal rules had a direct impact on the finances of their municipalities, but rather indirectly through transfers reduction. Chapter 2 focuses on the introduction of fiscal rules at the Swiss municipal level and their effect on local financial outcomes. The analysis is performed with a distributed-lag model exploiting their staggered and exogenous introduction over the past 4 decades. First, estimation suggests that more stringent fiscal rules decrease per capita expenditures by 8% and per capita revenues by 8.3% in the long-term, de facto restricting government's size. Second, failing to control for the dynamic effects leads to a substantial effect underestimation for both expenditures and revenues. Third, the effect is heterogeneous and largest in jurisdictions with above-average population. Chapter 3 investigates mobility reactions to tax rates and public goods in Switzerland. We match administrative data covering the whole population to income data from the social security earnings, and we analyze 1,500,000 households' relocations over eight years (2010-2017). We first show that migration profiles are similar across income groups and decrease in age. Migration responses to the net-of-tax rate and to local spending are analyzed by income groups using an aggregate model of migration flows between municipality pairs. Our results show heterogeneous responses: the tax-base elasticity to net-of-tax rate seems positive and predominantly driven by households without children in the highest quartile of the income distribution. The estimated elasticity is around 3 for the top 10% incomes and stable across specifications. We proxy public good's provision by school expenditures and childcare subsidies. We find a negative relationship between school expenditures and mobility inflows. In contrast, subsidies have a positive impact.
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