Political Jurisdictions in Heterogeneous Communities [report]

Alberto Alesina, Reza Baqir, Caroline Hoxby
2000 unpublished
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
more » ... d 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.
doi:10.3386/w7859 fatcat:tj5qm6pkqbe5hdte4nvqx25xda