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Abstract

This dissertation consists of three independent chapters, linked by by an interest in the connection between decentralized fiscal authority and economic variation across geographies and industries. Chapter 1 examines the effects and incidence of California's 2001 school bond reform, which increased local discretion over school facility spending by reducing the vote threshold for approving school capital projects. Evaluating this reform as a natural experiment, I estimate that affected districts experienced an increase in outlays equivalent to three extra years of typical spending, augmenting the value of their facility stock by 28 percent. These effects were concentrated in districts with high income heterogeneity, consistent with a multicommunity theory of public good provision presented in the chapter. While these investments did not increase academic achievement or home values, they did drive sorting into these districts by families with children, particularly those below the poverty line. However, the magnitude of sorting effects is small, rendering the incidence of the new spending approximately neutral with respect to poverty status. Chapter 2 uses a unique administrative dataset to provide new evidence on social insurance payroll tax non-compliance in China, particularly among smaller firms excluded from previous studies. Non-compliance is widespread: 54 percent of firms pay no SI taxes at all, leaving 35 percent of employees without coverage. Even among participating firms, 85 percent are undercompliant. Compliance increases sharply with firm size and is negatively correlated with effective tax rates, which are distorted by a regressive tax structure. We investigate whether China’s decentralized SI administration and insurance pooling incentivizes geographic variation in enforcement. Chapter 3 evaluates China's primary fiscal response to the COVID-19 crisis: an exemption for firms from making SI contributions, resulting in an average payroll tax cut of 21 percentage points. Non-compliance substantially reduces the reach of this fiscal response and skews the tax savings towards large firms. Offsetting this negative targeting is the much higher labor intensity of the firms most vulnerable and exposed to the economic shock, which creates a larger benefit from payroll tax cuts for these firms if they pay SI taxes.