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

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).

Activity Spaces, Biographies, Social Networks and their Welfare Gains and Externalities: Some Hypotheses and Empirical Results

“…The maps, in which distances indicate travel time, show that the country has essentially been more than halved in size, which is even more important when one considers that the motorisation rate went from 31 for 1000 inhabitants in 1950 to 492 in 2000 (Widmer and Meister, 2005). While the costs for the usage of cars have stagnated during the last decades (Abay, 2000 for Switzerland andRhode andStrumpf, 2003 for the USA), the quality adjusted purchase costs continue to decline, as shown in Figure 2. The even more dramatic drop in the costs of telecommunication (Figure 3) is in line with the developments in physical transport.…”

The causes and economic consequences of envy

“…Hence, our model predicts that the rise in inter-firm wage inequality should be associated with a change in mobility costs. Rhode and Strumpf (2003) establish the existence of a secular decrease in mobility costs. 15 This is not only true of physical transportation costs and communication costs, but also of more intangible ones.…”

Choosing peers: Homophily and polarization in groups

“…We maintain our assumption regarding the agents'pessimism since it simpli…es the description of our results (and return to the one modi…cation the above alternative assumption would imply in Footnote 17). 14 In the current paper we do not consider population-wide equilibria. However, one could certainly contemplate such a notion.…”

“…6 For example, it has been empirically documented how improvements in public goods tend to increase the size of a community (Banzhaf and Walsh, 2008). See also Rhode and Strumpf (2003) and Sethi and Somanathan (2004). changes in the public good o¤erings when contemplating a deviation to a di¤erent community.…”