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Essays on Local Public Finance and Financial Behavior
AdvisorTosun, Mehmet S.
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This dissertation focuses on two major topics. The first two essays examine the impact of local tax policies on local economy, while the third essay looks specifically at the behavioral effects of mobile payment and online shopping in China.The first essay examines the relationship between business activity and property taxes using county-level data for the period 1986-2012. This paper uses three alternative variables to measure the business activity, including county annual payroll, county business employment, and the number of establishments in the county. Previous studies focused mostly on either state-level analysis or analysis based on local data from a single state. This project contributes to the literature by using county-level data from all U.S. counties over an extended period. Besides, the project contributes by examining the spatial link between local business activity in contiguous counties. The second essay examines how business activity responds to local taxation through the property tax and the local sales tax. We use county-level data for Nevada for the period 1999-2014. In addition to using the total county-level property tax rate, we are also examining different components of the property tax, such as the rates for the school district, county, and special districts. For the local sales tax rate, we are examining specifically the response of business activity to the local sales tax rate changes.We are examining the business response to local taxation instead of state taxes. In addition, by focusing on both property and local sales taxes, we are examining not one but two of the most critical local tax instruments. We are also addressing the endogeneity of tax rates and spatial dependence among counties using a Spatial Durbin Model. The third essay discusses the potential impacts of online consumption and mobile payment on personal behaviors, including consumption, deposit, and investment and investigates several determinants regarding individual usage of the Housing Provident Fund, from the perspective of income propensity and the improvement in the efficiency of income. Using data from the 2013 and 2015 Chinese Household Financial Survey, we find a particularly robust positive and significant association between overall consumption and online consumption in younger generations, and a positive relationship between the use of the Housing Provident Fund and mobile payment. The empirical results also suggest that time deposits, demand deposits, and stock investments are positively related to online purchase for different kinds of population.