Full Citation

Title: Racial Heterogeneity and Local Government Finances: Evidence from the Great Migration

Citation Type: Working Paper

Publication Year: 2018

ISBN:

ISSN:

DOI:

NSFID:

PMCID:

PMID:

Abstract: Between 1915 and 1930, during the First Great Migration, more than 1.5 million African Americans migrated from the South to the North of the United States, altering the racial proÖle of several northern cities for the Örst time in American history. I ex- ploit this episode to study how an increase in racial heterogeneity a§ects the provision of public goods and city Önances. I predict black in-migration by interacting 1900 set- tlements of southern born blacks across northern cities with variation in outmigration from the South after 1910. I Önd that black ináows had a strong, negative impact on both public spending and tax revenues in northern cities. The decline in tax revenues was not due to citiesídecision to cut tax rates, but was entirely driven by a reduction in property values. These Öndings suggest that the housing market response to black arrivals imposed a negative Öscal externality to receiving cities that, unable or unwill- ing to raise taxes, were forced to cut spending. Consistent with this interpretation, cities did not change the allocation of spending across categories, while the negative e§ects of black in-migration were smaller when controlling for the (predicted) white outáows triggered by black arrivals.

Url: https://www.hbs.edu/faculty/Publication Files/19-006 (4)_b2914c7d-2a7a-4a89-9ca9-d5406213f926.pdf

User Submitted?: No

Authors: Tabellini, Marco

Series Title: HBS Working Paper Series

Publication Number: 19-006

Institution: Harvard Business School

Pages: 65

Publisher Location:

Data Collections: IPUMS USA

Topics: Migration and Immigration, Race and Ethnicity

Countries: United States