Political Jurisdictions in Heterogeneous Communities

Alberto Alesina, Reza Baqir and Caroline Hoxby

No 1949, Harvard Institute of Economic Research Working Papers from Harvard - Institute of Economic Research

Abstract: We investigate the number and size of local political jurisdictions are determined, by focusing on the tradeoff between the benefits of economies of scale and the costs of a heterogeneous population. We consider heterogeneity in income, race, ethnicity, and religion, and we test the model using American school districts, school attendance areas, municipalities, and special districts. Using cross-sectional and panel analysis, we find very little evidence of tradeoffs between economies of scale and ethnic or religious heterogeneity. However, we find evidence of a tradeoff between economies of scale and income heterogeneity and particularly strong evidence of a tradeoff between economies of scale and racial heterogeneity. To clarify the direction of causality between heterogeneity and jurisdictions, we exploit shocks to racial heterogeneity generated by the two World Wars.

Date: 2002
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Related works:
Journal Article: Political Jurisdictions in Heterogeneous Communities (2004)
Working Paper: Political Jurisdictions in Heterogeneous Communities (2004)
Working Paper: Political Jurisdictions in Heterogeneous Communities (2000)
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