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The Cost of Segregation in Social Networks

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  • Nizar Allouch

    ()
    (Queen Mary, University of London)

Abstract

This paper investigates the private provision of public goods in segregated societies. While most research agrees that segregation undermines public provision, the findings are mixed for private provision: social interactions, being strong within groups and limited across groups, may either increase or impede voluntary contributions. Moreover, although efficiency concerns generally provide a rationale for government intervention, surprisingly, little light is shed in the literature on the potential effectiveness of such intervention in a segregated society. This paper first develops an index based on social interactions, which, roughly speaking, measures the welfare impact of income redistribution in an arbitrary society. It then shows that the proposed index vanishes when applied to large segregated societies, which suggests an "asymptotic neutrality" of redistributive policies.

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Paper provided by Queen Mary, University of London, School of Economics and Finance in its series Working Papers with number 703.

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Date of creation: May 2013
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Handle: RePEc:qmw:qmwecw:wp703

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Keywords: Public goods; Segregated society; Private provision; Networks; Bonacich transfer index;

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  19. Nizar Allouch, 2012. "On the Private Provision of Public Goods on Networks," Working Papers 689, Queen Mary, University of London, School of Economics and Finance.
  20. Christina M. Fong & Erzo F. P. Luttmer, 2009. "What Determines Giving to Hurricane Katrina Victims? Experimental Evidence on Racial Group Loyalty," American Economic Journal: Applied Economics, American Economic Association, vol. 1(2), pages 64-87, April.
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