Political Jurisdictions in Heterogeneous Communities

49 Pages Posted: 28 Feb 2002

See all articles by Alberto F. Alesina

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

Caroline M. Hoxby

Stanford University; National Bureau of Economic Research (NBER); Hoover Institution; Stanford University

Multiple version iconThere are 3 versions of this paper

Date Written: March 2002

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.

Suggested Citation

Alesina, Alberto F. and Baqir, Reza and Hoxby, Caroline M., Political Jurisdictions in Heterogeneous Communities (March 2002). Available at SSRN: https://ssrn.com/abstract=302394 or http://dx.doi.org/10.2139/ssrn.302394

Alberto F. Alesina (Contact Author)

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