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Ethnic Polarization and Municipal Spending

Author

Listed:
  • Jannett Highfill

    (Bradley University)

  • Kevin O'Brien

    (Bradley University)

Abstract

Ethnic heterogeneity has been found to affect government spending and tax outcomes at all levels of government. While heterogeneity may sometimes be productivity enhancing because of the value of differing experiences and knowledge, it may also lead to social conflict and rent seeking. The goal of the present paper is to examine the effect of ethnic heterogeneity on overall spending and taxes for municipalities in the U.S., as well as for certain productive, protective, and redistributive services. The original contribution of the paper is the use of a standard polarization index as a measure of heterogeneity, which then allows for a comparison with a fractionalization index. Briefly, the main result of the paper is that ethnic heterogeneity generally has a positive effect on municipal spending and taxes as well as on some specific spending categories; the evidence when using the polarization measure is somewhat stronger than when using the fractionalization measure.

Suggested Citation

  • Jannett Highfill & Kevin O'Brien, 2017. "Ethnic Polarization and Municipal Spending," Journal of Economic Insight, Missouri Valley Economic Association, vol. 43(2), pages 49-68.
    • Handle: RePEc:mve:journl:v:43:y:2017:i:2:p:49-68
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    More about this item

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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