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The Cost of Segregation in Social Networks

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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File URL: http://www.econ.qmul.ac.uk/papers/doc/wp703.pdf
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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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  1. Abhijit Banerjee & Lakshmi Iyer & Rohini Somanathan, 2005. "History, Social Divisions, and Public Goods in Rural India," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 639-647, 04/05.
  2. Nizar Allouch, 2012. "On the Private Provision of Public Goods on Networks," Working Papers 2012.40, Fondazione Eni Enrico Mattei.
  3. Bernheim, B Douglas, 1986. "On the Voluntary and Involuntary Provision of Public Goods," American Economic Review, American Economic Association, vol. 76(4), pages 789-93, September.
  4. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  5. Alesina, Alberto & Baqir, Reza & Easterly, William, 1999. "Public goods and ethnic divisions," Policy Research Working Paper Series 2108, The World Bank.
  6. James M. Poterba, 1997. "Demographic structure and the political economy of public education," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(1), pages 48-66.
  7. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
  8. Easterly, W & Levine, R, 1996. "Africa's Growth Tragedy : Policies and Ethnic Divisions," Papers 536, Harvard - Institute for International Development.
  9. 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.
  10. Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211.
  11. Sergio Currarini & Matthew O. Jackson & Paolo Pin, 2009. "An Economic Model of Friendship: Homophily, Minorities, and Segregation," Econometrica, Econometric Society, vol. 77(4), pages 1003-1045, 07.
  12. Coralio Ballester & Antoni Calvo-Armengol & Yves Zenou, 2005. "Who's Who in Networks. Wanted: the Key Player," NajEcon Working Paper Reviews 666156000000000586, www.najecon.org.
  13. Bramoulle, Yann & Kranton, Rachel, 2007. "Public goods in networks," Journal of Economic Theory, Elsevier, vol. 135(1), pages 478-494, July.
  14. Rahmi İlkılıç, 2011. "Networks of common property resources," Economic Theory, Springer, vol. 47(1), pages 105-134, May.
  15. Raquel Fernández & Gilat Levy, 2005. "Diversity and Redistribution," NBER Working Papers 11570, National Bureau of Economic Research, Inc.
  16. Timothy Besley & Rohini Pande & Lupin Rahman & Vijayendra Rao, 2004. "The Politics of Public Good Provision: Evidence from Indian Local Governments," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 416-426, 04/05.
  17. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  18. Francis Bloch & Unal Zenginobuz, 2007. "The effect of spillovers on the provision of local public goods," Review of Economic Design, Springer, vol. 11(3), pages 199-216, November.
  19. Jacob L. Vigdor, 2004. "Community Composition and Collective Action: Analyzing Initial Mail Response to the 2000 Census," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 303-312, February.
  20. Yann Rébillé & Lionel Richefort, 2012. "Welfare Analysis in Games with substitutabilities," Working Papers hal-00732950, HAL.
  21. 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.
  22. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-93, May.
  23. Bramoullé, Yann & Currarini, Sergio & Jackson, Matthew O. & Pin, Paolo & Rogers, Brian W., 2012. "Homophily and long-run integration in social networks," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1754-1786.
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