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American Economic Review Vol. 93 No. 5 2003

Assessing the Importance of Tiebout Sorting: Local Heterogeneity from 1850 to 1990

Paul W. Rhode1; Koleman S. Strumpf2

1 Department of Economics, CB #3305, University of North Carolina, Chapel Hill, NC 27599, and National Bureau of Economic Research. · 2 Department of Economics, CB 3305, University of North Carolina, Chapel Hill, NC 27599.

Abstract

This paper argues that long-run trends in geographic segregation are inconsistent with models where residential choice depends solely on local public goods (the Tiebout hypothesis). We develop an extension of the Tiebout model that predicts as mobility costs fall, the heterogeneity across communities of individual public good preferences and of public good provision must (weakly) increase. Given the secular decline in mobility costs, these predictions can be evaluated using historical data. We find decreasing heterogeneity in policies and proxies for preferences across (i) a sample of U.S. municipalities (1870–1990); (ii) all Boston-area municipalities (1870–1990); and (iii) all U.S. counties (1850–1990).

DOI
10.1257/000282803322655482
Volume
93
Issue
5
Pages
1648-1677
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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