1999/11/01 by Alberto Alesina, Reza Baqir, William Easterly · 4 citations
Economics, Econometrics and Finance · Social Sciences · #Fiscal Policy and Economic Growth #Local Government Finance and Decentralization #Taxation and Compliance Studies
paper · doi:10.1162/003355399556269
openalex publication_date 1999/11/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
We present a model that links heterogeneity of preferences across ethnic groups in a city to the amount and type of public goods the city supplies. We test the implications of the model with three related data sets: U. S. cities, U. S. metropolitan areas, and U. S. urban counties. 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. We conclude that ethnic conflict is an important determinant of local public finances.