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Public goods and ethnic divisions, Volume 1
 
Author:Alesina, Alberto; Baqir, Reza; Easterly, William; Country:United States;
Date Stored:1999/09/14Document Date:1999/05/31
Document Type:Policy Research Working PaperSubTopics:Environmental Economics & Policies; Economic Theory & Research; Economic Stabilization; Inequality; Public Health Promotion; Public Sector Economics; Decentralization
Language:EnglishMajor Sector:Public Administration, Law, and Justice
Region:OTHReport Number:WPS2108
Sub Sectors:Public Financial ManagementCollection Title:Policy, Research working paper ; no. WPS 2108
Volume No:1Related Dataset:Public Goods and Ethnic Divisions;

Summary: The authors 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. Results show that the shares of spending on productive public goods - education, roads, sewers, and trash pickup _ 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. They conclude that the ethnic conflict is an important determinant of local public finances. In cities where ethnic groups are polarized, and where politicians have ethnic constituencies, the share of spending that goes to public goods is low. Their results are driven mainly by how white-majority cities react to varying minority-groups sizes. Voters choose lower public goods when a significant fraction of tax revenues collected from one ethnic group is used to provide public goods shared with other ethnic groups.

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