Public Goods and Ethnic Divisions

Posted: 13 Dec 1997

See all articles by William Easterly

William Easterly

New York University - Department of Economics

Alberto F. Alesina

Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Reza Baqir

International Monetary Fund (IMF) - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: September 1997

Abstract

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: U.S. cities, U.S. metropolitan areas, and U.S. urban counties. Results show that 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. Ethnic fragmentation is negatively related to the share of local spending on welfare, and 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.

JEL Classification: H4, O1, O18, P16

Suggested Citation

Easterly, William and Alesina, Alberto F. and Baqir, Reza, Public Goods and Ethnic Divisions (September 1997). Available at SSRN: https://ssrn.com/abstract=46092

William Easterly (Contact Author)

New York University - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States

Alberto F. Alesina

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
617-495-8388 (Phone)
617-495-7730 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Reza Baqir

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-5332 (Phone)
202-623-7580 (Fax)

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