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AID, EXPENDITURES, AND LOCAL GOVERNMENT STRUCTURE

JOHN C. WEICHER
National Tax Journal
Vol. 25, No. 4 (DECEMBER 1972), pp. 573-583
Published by: National Tax Association
Stable URL: http://www.jstor.org/stable/41791841
Page Count: 11
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AID, EXPENDITURES, AND LOCAL GOVERNMENT STRUCTURE
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Abstract

Recent theoretical and empirical work on the relationship between aid and expenditures has failed to take account of the vast differences in the structure of local government between states. This study investigates the effect that aid given to one local government (e.g., the city) has on expenditures by both that government and other local governments serving exactly the same population (e.g., the school district). The study finds that aid given to either government will increase expenditures by each by the same amount. The effect on expenditures does not depend on which government is aided. The implications of the results for revenue-sharing are discussed.

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