Association for Public Policy Analysis & Management

Streams of institutional, economic and fiscal factors recently have been converging and substantially changing the landscape of local government in the United States. Consolidation, an old and new approach, has increasingly been used and therefore drawn much public attention nowadays. This paper is the first study investigating whether village dissolution, as a form of general-purpose government reorganization, will affect the attractiveness of local communities by exploring how much home buyers are willing to pay to live in a village that has recently dissolved in NY State. Towards that ends, a repeat sales sample, coupled with parcel-level fixed effects and village-specific time trends, is employed to estimate whether local housing demand has been affected by village dissolution, both in former village areas and Town outside village (TOV) areas. Preliminary results shows that village dissolution events, although do not significantly affect house prices in former village areas, do impose negative influences on property values in TOV areas probably because TOV residents are upset with the negative externalities of village dissolutions. The findings imply that the institutional design of village dissolution could be improved by involving more TOV policy stakeholders into decision-making process.