Segregation and Tiebout Sorting: Investigating the Link between Investments in Public Goods and Neighborhood Tipping

43 Pages Posted: 7 Jun 2010

See all articles by H. Spencer Banzhaf

H. Spencer Banzhaf

Georgia State University - Department of Economics; PERC - Property and Environment Research Center; National Bureau of Economic Research (NBER)

Randall Walsh

University of Pittsburgh - Department of Economics

Date Written: June 2010

Abstract

Segregation has been a recurring social concern throughout human history. While much progress has been made to our understanding of the mechanisms driving segregation, work to date has ignored the role played by location-specific amenities. Nonetheless, policy remedies for reducing group inequity often involve place-based investments in minority communities. In this paper, we introduce an exogenous location-specific public good into a model of group segregation. We characterize the equilibria of the model and derive the comparative statics of improvements to the local public goods. We show that the dynamics of neighborhood tipping depend on the levels of public goods. We also show that investments in low-public good communities can actually increase segregation.

Suggested Citation

Banzhaf, H. Spencer and Walsh, Randall, Segregation and Tiebout Sorting: Investigating the Link between Investments in Public Goods and Neighborhood Tipping (June 2010). NBER Working Paper No. w16057. Available at SSRN: https://ssrn.com/abstract=1620774

H. Spencer Banzhaf (Contact Author)

Georgia State University - Department of Economics ( email )

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HOME PAGE: http://www2.gsu.edu/~prchsb/

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National Bureau of Economic Research (NBER) ( email )

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Randall Walsh

University of Pittsburgh - Department of Economics ( email )

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Pittsburgh, PA 15260
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