1、Majority rules8-58-68-7Majority Rule and the Median VoterSeries of binary electionsWinning size is preferred size of median voter8-8Formation of Homogeneous MunicipalitiesMetro area initially has 3 diverse municipalities,each with 3 citizensSorting by park demand makes allows everyone to get preferr
2、ed parkLois types form municipality with small park Marian types form municipality with medium parkHiram types form municipality with large parkHomogeneous municipalities accommodate diversity in demand8-9Municipality Formation for Tax PurposesSo far,assume that each citizen/voter in a municipality
3、pays the same taxWhat if tax base varies across citizens?8-10Implications of Variation in Tax BaseVariation in tax base increases number of communities from 3 to 9Real citiesTax on propertyVariation in property value causes municipal formation8-11Neighborhood ExternalitiesExternalities for kidsPosit
4、ive adult role models for kidsClassmates in school:focused vs.disruptiveAdult externalities:Job information,drug usePositive externalities increase with income and education level8-12Neighborhood Choice:IntroductionWho gets the desirable neighbors?Segregated or integrated neighborhoods?Sorting or mi
5、xing with respect to income,age,race?Implications for the price of land?8-13Bidding for Lots in Desirable NeighborhoodsFocus on positive externalities that increase with income and education levelWhat is income mix of neighborhoods-segregated,or integrated?Model setupTwo neighborhoods,A and B,each w
6、ith 100 lotsTwo income groups(high and low),each with 100 householdsOnly difference between neighborhoods is income mix8-14Looking for a Stable EquilibriumStarting point:Integrated(50-50)neighborhoodSmall move toward segregation:Self-reinforcing or self-correcting?Different Outcomes(Stable Equilibri
7、a)Segregation:Figure 8-2Integration:Figure 8-3Mixed:Figure 8-48-158-168-178-18Rent Premium in Mixed NeighborhoodsPremium=$24 Each household in A(high&low income)pays$24 extra Households in B have inferior income mix but pay$24 less in rentAxiom 1:Prices adjust for locational equilibrium8-198-20Role
8、of Lot SizeLand as“normal”good:High-income households choose larger lotsLarger lot means smaller premium per unit of landPair of low-income households outbids single high-income householdResult:Integration rather than segregation8-21Minimum Lot Size Zoning and SegregationMLS increases premium per un
9、it land for low-income householdLow-income households more likely to be outbid for lots in AMLS promotes segregation8-22Schools and Neighborhood Choice:IntroductionHow does achievement vary across neighborhoods?How do local schools affect location choices?8-238-24Education Production FunctionAchieve
10、ment=f(H,P,T,S)Home environment(H)most important inputFavorable peers(P)are smart,motivated,not disruptiveTeachers(T)vary in productivitySmaller class size(S)promotes learningLargest gains for low-income studentsHigher graduation rates and college attendance8-25Education and Income SortingFiscal sor
11、ting:Demand for school spending increases with incomePeer sorting:WTP for better school peers increases with income8-26Crime and Neighborhood Choice:IntroductionHow does crime vary across neighborhoods?How does variation in crime affect location choices and housing prices?8-278-288-29Implications of
12、 Spatial Variation in CrimeElasticity of house value with respect to crime rate=-0.067WTP for low-crime neighborhood increases with incomeResult:Income segregation8-30Measuring Racial SegregationBlacks:2/3 in central cities;1/3 in suburbs;Reverse for whitesUS Index of dissimilarity=0.64:64%of must r
13、elocate for integration1980-2000,index decreased in 203 of 220 metropolitan areas;average reduction was 12%Small reductions in most segregated cities(Detroit,Milwaukee,New York,Newark,Chicago,Cleveland)8-318-328-33Racial Preferences and Neighborhood ChoiceBlacks:majority prefer integration;integrati
14、on means 50-50 splitWhites:majority prefer segregation;integration means 80-20 split8-348-35Other Reasons for Racial SegregationRacial segregation as a byproduct of income segregation:Small contributionMinimum lot size zoning excludes low-income householdsRacial steering(reflecting prejudice)reduces
15、 access of black householdsPublic housing concentrates low-income householdsAlternative:Portable vouchers reduce concentration8-36The Spatial MismatchConcentration of low-income&minority workers in central city,far from suburban jobsLonger commuting time and higher commuting timeLower employment rates for black youthsInfer
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