Local public sector rent-seeking and its impact on local land values

Abstract

The paper investigates whether local public unions successfully appropriate locational rents and whether local land markets capitalize the impacts of rent-seeking activity. Public sector unions do generate wage premia for their members. We present evidence that the ramifications of rent- seeking by strong local public unions are capitalized by local land markets. House values are 12% lower in cities with other two-thirds of their local public workforces organized by unions than in cities without such high levels of union organization.