Public Goods and Ethnic Divisions
We present a model that links heterogeneity of preferences across ethnic groups in a city to the amount and type of public goods the city supplies. We test the implications of the model with three related data sets: U. S. cities, U. S. metropolitan areas, and U. S. urban counties. Results show that the shares of spending on productive public goodsâ€”education, roads, sewers and trash pickupâ€”in U. S. cities (metro areas/urban counties) are inversely related to the city's (metro area's/county's) ethnic fragmentation, even after controlling for other socioeconomic and demographic determinants. We conclude that ethnic conflict is an important determinant of local public finances.
|Date of creation:||1999|
|Date of revision:|
|Publication status:||Published in Quarterly Journal of Economics|
|Contact details of provider:|| Postal: Littauer Center, Cambridge, MA 02138|
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