Alesina, Alberto, Reza Baqir and William Easterly, "Public Goods and Ethnic Divisions", Quarterly Journal of Economics 114 (November): 1243-1284. 1999.

Abstract of Paper 
We present a model that links heterogeneity of preferences across ethnic groups in a city to the amount and type of public good the city supplies. We test the implications of the model with three related datasets: US cities, US metropolitan areas, and US urban counties.

Results show that productive public goods -- education, roads, libraries, sewers and trash pickup -- in US 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. Ethnic fragmentation is negatively related to the share of local spending on welfare. The results are mainly driven by observations in which majority whites are reacting to varying sizes of minority groups. We conclude that ethnic conflict is an important determinant of local public finances.

Datasets:
There are three related datasets on US cities, US metropolitan areas, and US urban counties.

Data sets are provided in csv format (comma separated values)