PUBLIC CHARACTERISTICS AND EXPENDITURES ON PUBLIC-SERVICES - AN EMPIRICAL-ANALYSIS

This article investigates the provision of police and education servic es using a new method of indexing quantities of local public services that isolates movements in shadow prices and quantities in expenditure data. Demand equations for two public characteristics (the crime safe ty rate and high school reading test pass rates) and two categories of expenditures (education and police services) are simultaneously estim ated for New Jersey municipalities. The relationship between public se rvices and public characteristics is estimated and both the ''own'' an d the ''cross''-effects of public services are found to be empirically significant. Increases in expenditures between 1982 and 1983 are foun d to largely reflect increases in quantities of education services and in prices of police services.