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Diversity and local public goods: a natural experiment with exogenous residential allocation

  • Yann Algan

    ()

    (Sciences-Po)

  • Camille Hémet

    ()

    (Sciences-Po)

  • David Laitin

    ()

    (Stanford University)

This paper demonstrates the effects of ethnic diversity on social relationships and the quality of public spaces at a very finite neighborhood level. We use detailed block level data on diversity and housing quality from a representative survey on housing in France. We show how and to what extent diversity among adjacent neighborhoods can affect household well-being and the quality of local public goods, whereas the previous literature looks at aggregate indicators and outcomes. Our identification strategy relies on the exogeneity of public housing allocations with respect to ethnic characteristics in France, and thereby eliminates bias due to endogenous residential sorting. Diversity is shown to have a negative effect on local public goods, either due to vandalism and to the lack of social policing, or due to collective action failure for maintenance. However, we find that diversity has no robust effect on civil conflict at a local level and, if anything, is more related to social anomie. We test the exogeneity of residential allocation across public housing blocks with respect to ethnic characteristics. We also show that our results are not driven by potential biases from self-reported well-being and that they hold even with objective measures of housing quality.

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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2012/24.

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Length: 61 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:ieb:wpaper:2012/6/doc2012-24
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  16. Dahlberg, Matz & Edmark, Karin & Lundqvist, Heléne, 2011. "Ethnic Diversity and Preferences for Redistribution," Working Paper Series, Center for Labor Studies 2011:1, Uppsala University, Department of Economics.
  17. Easterly, W & Levine, R, 1996. "Africa's Growth Tragedy : Policies and Ethnic Divisions," Papers 536, Harvard - Institute for International Development.
  18. Roland G. Fryer & Steven D. Levitt, 2004. "The Causes and Consequences of Distinctively Black Names," The Quarterly Journal of Economics, MIT Press, vol. 119(3), pages 767-805, August.
  19. Rachel Glennerster & Edward Miguel & Alexander Rothenberg, 2010. "Collective Action in Diverse Sierra Leone Communities," NBER Working Papers 16196, National Bureau of Economic Research, Inc.
  20. Claude Taffin & Thierry Debrand, 2005. "Les facteurs structurels et conjoncturels de la mobilité résidentielle depuis 20 ans," Économie et Statistique, Programme National Persée, vol. 381(1), pages 125-146.
  21. Pierre-Philippe Combes & Bruno Decreuse & Benoît Schmutz & Alain Trannoy, 2012. "The Neighbor is King: Customer Discrimination in the Housing Market," Working Papers halshs-00793403, HAL.
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  23. Miguel, Edward & Gugerty, Mary Kay, 2005. "Ethnic diversity, social sanctions, and public goods in Kenya," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2325-2368, December.
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