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Segregation and Tiebout Sorting: Investigating the Link between Investments in Public Goods and Neighborhood Tipping

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  • H. Spencer Banzhaf
  • Randall P. Walsh

Abstract

Segregation has been a recurring social concern throughout human history. While much progress has been made to our understanding of the mechanisms driving segregation, work to date has ignored the role played by location-specific amenities. Nonetheless, policy remedies for reducing group inequity often involve place-based investments in minority communities. In this paper, we introduce an exogenous location-specific public good into a model of group segregation. We characterize the equilibria of the model and derive the comparative statics of improvements to the local public goods. We show that the dynamics of neighborhood tipping depend on the levels of public goods. We also show that investments in low-public good communities can actually increase segregation.

Suggested Citation

  • H. Spencer Banzhaf & Randall P. Walsh, 2010. "Segregation and Tiebout Sorting: Investigating the Link between Investments in Public Goods and Neighborhood Tipping," NBER Working Papers 16057, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16057
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    Cited by:

    1. Yushim Kim & Heather Campbell & Adam Eckerd, 2014. "Residential Choice Constraints and Environmental Justice," Social Science Quarterly, Southwestern Social Science Association, vol. 95(1), pages 40-56, March.
    2. Nicolai V. Kuminoff & V. Kerry Smith & Christopher Timmins, 2013. "The New Economics of Equilibrium Sorting and Policy Evaluation Using Housing Markets," Journal of Economic Literature, American Economic Association, vol. 51(4), pages 1007-1062, December.
    3. Janet Currie, 2011. "Inequality at Birth: Some Causes and Consequences," American Economic Review, American Economic Association, vol. 101(3), pages 1-22, May.
    4. Brooks M. Depro & Christopher Timmins & Maggie O'Neil, 2012. "Meeting Urban Housing Needs: Do People Really Come to the Nuisance?," NBER Working Papers 18109, National Bureau of Economic Research, Inc.
    5. Kollmann, Trevor & Marsiglio, Simone & Suardi, Sandy, 2018. "Racial segregation in the United States since the Great Depression: A dynamic segregation approach," Journal of Housing Economics, Elsevier, vol. 40(C), pages 95-116.
    6. Banzhaf, H. Spencer, 2011. "The Political Economy of Environmental Justice," MPRA Paper 101191, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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