Land Use Controls, Fiscal Zoning, and the Local Provision of Education

Eric A. Hanushek
Kuzey Yilmaz
Published Date
September 2015
Public Finance Review
pp. 559-585

Considerable prior analysis has gone into the study of zoning restrictions on locational choice and on fiscal burdens, but none addresses the level and distribution of public goods provided under fiscal zoning. Our analysis emphasizes the interplay between land use restrictions and public good provision, focusing on schooling outcomes. We extend existing general equilibrium models of location and the provision of education so that fiscal zoning can be put into Tiebout choice. Some households create a fiscal burden, motivating the use of exclusionary land-use controls by local governments. We then analyze the market effects of different land-use controls (minimum lot size zoning, local public finance with a head tax, and growth restrictions through fringe zoning) and demonstrate how household behavior directly affects the equilibrium outcomes and the provision of the local public good.