Public Goods and Ethnic Divisions* (2024)

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Volume 114 Issue 4 November 1999
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Alberto Alesina

Harvard University


Massachusetts Institute of Technology


National Bureau of Economic Research

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Reza Baqir

University of California



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William Easterly

World Bank

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We present a model that links heterogeneity of preferences across ethnic groups in a city to the amount and type of public goods the city supplies. We test the implications of the model with three related data sets: U. S. cities, U. S. metropolitan areas, and U. S. urban counties. Results show that the shares of spending on productive public goods—education, roads, sewers and trash pickup—in U. S. cities (metro areas/urban counties) are inversely related to the city's (metro area's/county's) ethnic fragmentation, even after controlling for other socioeconomic and demographic determinants. We conclude that ethnic conflict is an important determinant of local public finances.

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© 1999 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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