The goal of this paper is to provide a comprehensive empirical analysis of majority rule and Tiebout sorting within a system of local jurisdictions. The idea behind the estimation procedure is to investigate whether observed levels of public expenditures satisfy necessary conditions implied by majority rule in a general equilibrium model of residential choice. The estimator controls for observed and unobserved heterogeneity among households, observed and unobserved characteristics of communities, and the potential endogeneity of prices and expenditures, as well as the self-selection of households into communities of their choice. We estimate the structural parameters of the model using data from the Boston Metropolitan Area. The empirical findings reject myopic voting models. More sophisticated voting models based on utility-taking provide a potential explanation of the main empirical regularities.

We present an equilibrium model of the market for higher education. Our model simultaneously predicts student selection into institutions of higher education, financial aid, educational expenditures, and educational outcomes. We show that the model gives rise to a strict hierarchy of colleges that differ by the educational quality provided to the students. We also develop a new estimation procedure that exploits the observed variation in prices within colleges. Identification is based on variation in endowments and technology. It does not rely on observed variation in potentially endogenous characteristics of colleges such as peer quality measures and expenditures. We estimate the structural parameters using data collected by the National Center for Education Statistics and aggregate data from Peterson's and the National Science Foundation.