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Do People Vote with Their Feet? An Empirical Test of Environmental Gentrification

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Author Info
Banzhaf, H. Spencer () (Resources for the Future)
Walsh, Randy

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Abstract

Tiebout’s (1956) suggestion that people “vote with their feet” to find the community that provides their optimal bundle of taxes and public goods has played a central role in the theory of local public finance over the past 50 years. Given the central importance of Tiebout’s insights, there have been surprisingly few direct tests of his premise. In this paper, we use a Tiebout equilibrium model to derive testable hypotheses about changes in local community demographics. The model clearly predicts increased population density in neighborhoods that experience an exogenous increase in public goods but yields only tentative predictions about the effect on neighborhood composition. To test these hypotheses, we use a difference-in-difference model to identify the effect of initial pollution levels and changes in local pollution on population and demographic composition. Our results provide strong empirical support for the notion that households “vote with their feet” in response to changes in environmental quality. This result has two implications. First, and most broadly, it provides direct empirical support for the assumptions underlying the Tiebout model. Second, in our particular application, the potential for what we call “environmental gentrification” has important implications both for the analysis of environmental equity and for the design of environmental policies aimed at benefiting the less-advantaged elements of society.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-06-10.

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Date of creation: 08 Mar 2006
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Handle: RePEc:rff:dpaper:dp-06-10

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Related research
Keywords: Tiebout; gentrification; air quality;

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Find related papers by JEL classification:
J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
R2 - Urban, Rural, and Regional Economics - - Household Analysis

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416. [Downloadable!] (restricted)
  2. Matthew E. Kahn, 2000. "Smog Reduction's Impact on California County Growth," Journal of Regional Science, Blackwell Publishing, vol. 40(3), pages 565-582. [Downloadable!] (restricted)
  3. Gramlich, Edward M & Rubinfeld, Daniel L, 1982. "Micro Estimates of Public Spending Demand Functions and Tests of the Tiebout and Median-Voter Hypotheses," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 536-60, June. [Downloadable!] (restricted)
  4. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February. [Downloadable!] (restricted)
    Other versions:
  5. James T. Hamilton, 1993. "Politics and Social Costs: Estimating the Impact of Collective Action on Hazardous Waste Facilities," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 101-125, Spring. [Downloadable!] (restricted)
  6. Brooks, Nancy & Sethi, Rajiv, 1997. "The Distribution of Pollution: Community Characteristics and Exposure to Air Toxics," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 233-250, February. [Downloadable!] (restricted)
  7. Patrick Bayer & Robert McMillan & Kim Rueben, 2004. "An Equilibrium Model of Sorting in an Urban Housing Market," NBER Working Papers 10865, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Brueckner, Jan K., 1982. "A test for allocative efficiency in the local public sector," Journal of Public Economics, Elsevier, vol. 19(3), pages 311-331, December. [Downloadable!] (restricted)
  9. Rubinfeld, Daniel L., 1987. "The economics of the local public sector," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 11, pages 571-645 Elsevier. [Downloadable!] (restricted)
  10. Holger Sieg & V. Kerry Smith & H. Spencer Banzhaf & Randy Walsh, 2004. "Estimating The General Equilibrium Benefits Of Large Changes In Spatially Delineated Public Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1047-1077, November. [Downloadable!] (restricted)
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  11. Dennis Epple & Holger Sieg, 1999. "Estimating Equilibrium Models of Local Jurisdictions," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 645-681, August. [Downloadable!] (restricted)
  12. Greenstone, Michael, 2004. "Did the Clean Air Act cause the remarkable decline in sulfur dioxide concentrations?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 585-611, May. [Downloadable!] (restricted)
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  13. Trudy Ann Cameron & Graham D. Crawford, 2003. "Superfund Taint and Neighborhood Change: Ethnicity, Age Distributions, and Household Structure," University of Oregon Economics Department Working Papers 2003-38, University of Oregon Economics Department, revised 01 Dec 2003. [Downloadable!]
  14. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Blackwell Publishing, vol. 64(4), pages 605-54, October. [Downloadable!] (restricted)
  15. Alberto Abadie & Guido W. Imbens, 2006. "Large Sample Properties of Matching Estimators for Average Treatment Effects," Econometrica, Econometric Society, vol. 74(1), pages 235-267, 01. [Downloadable!] (restricted)
  16. Graves, Philip E & Waldman, Donald M, 1991. "Multimarket Amenity Compensation and the Behavior of the Elderly," American Economic Review, American Economic Association, vol. 81(5), pages 1374-81, December. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michael Greenstone & Justin Gallagher, 2006. "Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program," Working Papers 0620, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research. [Downloadable!]
    Other versions:
  2. Ed Balsdon, 2007. "Property Value Capitalization And Municipal Open Space Referenda," Working Papers 0019, San Diego State University, Department of Economics. [Downloadable!]
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