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Assessing the Importance of Tiebout Sorting: Local Heterogeneity from 1850 to 1990

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  • Paul W. Rhode
  • Koleman S. Strumpf

Abstract

This paper argues that long-run trends in geographic segregation are inconsistent with models where residential choice depends solely on local public goods (the Tiebout hypothesis). We develop an extension of the Tiebout model that predicts as mobility costs fall, the heterogeneity across communities of individual public good preferences and of public good provision must (weakly) increase. Given the secular decline in mobility costs, these predictions can be evaluated using historical data. We find decreasing heterogeneity in policies and proxies for preferences across (i) a sample of U.S. municipalities (1870-1990); (ii) all Boston-area municipalities (1870-1990); and (iii) all U.S. counties (1850-1990).

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/000282803322655482
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 93 (2003)
Issue (Month): 5 (December)
Pages: 1648-1677

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Handle: RePEc:aea:aecrev:v:93:y:2003:i:5:p:1648-1677

Note: DOI: 10.1257/000282803322655482
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  1. La Ferrara, Eliana & Alesina, Alberto, 2000. "Participation in Heterogeneous Communities," Scholarly Articles 4551796, Harvard University Department of Economics.
  2. Alberto Alesina & Reza Baqir & William Easterly, 1997. "Public Goods and Ethnic Divisions," NBER Working Papers 6009, National Bureau of Economic Research, Inc.
  3. Benabou, Roland, 1996. "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and School Finance," American Economic Review, American Economic Association, vol. 86(3), pages 584-609, June.
  4. Alberto Alesina & Eliana La Ferrara, . "Participation in Heterogeneous Communities," Working Papers 151, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  5. Alberto Alesina & Reza Baqir & Caroline Hoxby, 2002. "Political Jurisdictions in Heterogeneous Communities," Harvard Institute of Economic Research Working Papers 1949, Harvard - Institute of Economic Research.
  6. Brueckner, Jan K., 2000. "A Tiebout/tax-competition model," Journal of Public Economics, Elsevier, vol. 77(2), pages 285-306, August.
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