Theses Doctoral

Residential Segregation, Municipal Competition, and Local Decision Making

Simpson, David Christopher

In this dissertation, I explore the relationship between race and ethnic conflict, demographic composition, and the provision of local public goods across U.S. cities. Specifically, I aim to understand how the preferences of neighboring, often conflicting, racial and ethnic groups are reflected in local political outcomes. To do this, I examine how urban segregation has evolved in recent decades, whether local public finance allocations correlate with differences in racial and ethnic composition, and how animosity between groups influences distributive bargaining decisions and municipal decentralization.

Chapter 1 addresses a significant challenge in analyzing demographic composition and municipal finance: the lack of an open-source, robust dataset for evaluating changes in segregation over time. To fill this gap, I introduce the Multi-Level Segregation Database (MLSD), a comprehensive resource that spans the 48 contiguous U.S. states and covers four Census years—1980, 1990, 2000, and 2010. The MLSD provides detailed entropy-based measures of total, within-place, and between-place segregation, offering a rich dataset for analysis. Specifically, the database includes 30,846 Census place observations representing 9,561 unique places in 481 Urbanized Areas (UAs) and 49,778 Census place observations representing 15,986 unique places in 363 Metropolitan Statistical Areas (MSAs). A key contribution of this chapter is the application of the Kullback-Leibler (KL) Divergence metric to quantify the distance between a place’s racial group population distribution and that of its broader region. The utility of the KL Divergence measure is demonstrated through a mathematical proof and a case study of Birmingham, AL. Using the MLSD, I conduct a descriptive analysis that reveals, contrary to previous findings, that segregation within and between places has generally declined from 1980 to 2010 in both UAs and MSAs. These findings challenge the prevailing notion that segregation patterns have predominantly shifted in recent decades from within cities to between cities. Instead, they reveal both forms of segregation have decreased over the four-decade period. This suggests a need for new theoretical approaches to understand what declining segregation truly signifies for group dynamics and political power at the local level. On one hand, lower levels of segregation might indicate improved intergroup relations and a greater willingness among groups to live in closer proximity. On the other hand, these trends could reflect ongoing processes of reshuffling and re-stratification—such as gentrification or the suburbanization of poverty—that perpetuate new forms of inequity.

In Chapter 2, I reexamine the relationship between demographic composition and public expenditures using a dataset encompassing over 9,000 cities across six 5-year intervals between 1982 and 2007, resulting in more than 45,000 observations on city-level demographics and public finance outcomes. I test hypotheses suggesting that measures of demographic composition—used as proxies for race and ethnic conflict—explain differences in aggregate spending behaviors of U.S. cities. Specifically, I examine whether increasing diversity and/or segregation at the local level is associated with lower public expenditures. To do this, I extend the MLSD to cover the intercensal years between 1980 and 2010, allowing for the pairing of robust diversity, segregation, and divergence measures with municipal financial data collected by the U.S. Census in years ending in 2 and 7. The Extended Multi-Level Segregation Database (EMLSD) enables the testing of various hypotheses using segregation metrics that are less prone to measurement error and account for changes in municipal boundaries over time. The analysis challenges the prevailing consensus that diverse or segregated communities necessarily experience lower public expenditures. Instead, the findings suggest that the relationship between demographic composition and public spending is more complex than previously understood, with no consistent evidence linking diversity or segregation to significant changes in public goods provision. This study therefore contributes to the literature by questioning long-held assumptions about the impact of demographic heterogeneity on aggregate public finance measures and by emphasizing the importance of considering alternative explanations, such as institutional design and inequitable distributions within cities, in understanding public budgeting outcomes.

Finally, in Chapter 3, I develop a two-stage model of legislative bargaining that examines how conflict between groups shapes distributive outcomes and municipal decentralization. The project begins with a single-stage game that recognizes that city council are often comprised of representatives from groups with intense animosities toward each other. Despite strong partisan divisions or cleavages along racial, ethnic, or religious lines, legislatures must still make collective decisions about the distribution of resources. In this chapter, I present a Baron and Ferejohn (1989) style model that captures how animosity shapes distributive bargaining payoffs and the prospects for legislation advanced through cross-party coalitions. I consider a two-party legislature with three members, where each member experiences some level of disutility from allocations to opposing party members. In equilibrium, I find that the expected payoff for majority (minority) party members increases (decreases) as animosity between groups rises. However, only a majority party proposer accrues the increased ex-post payoffs associated with higher animosity, as the proposer can use the threat of cross-party coalition formation to extract additional surplus from co-party members.

I then embed the new animosity bargaining framework in a two-stage model of municipal decentralization. The model indicates that the threat of decentralization in stage two can lead to a more equitable—though still unequal—distribution of resources across districts in stage one. When animosity between opposing groups is relatively low, the power to threaten decentralization compels players to form unanimous coalitions and allocate resources to every district, rather than excluding one legislator as seen in the single-stage model. Moreover, the option to decentralize diminishes the proposer’s ability to extract additional resources from other players, ensuring that all players receive the same payoff regardless of whether they are the proposer or a coalition member. Still, like the single-period game, the majority party players are better off than the minority player in equilibrium. Finally, at higher levels of conflict, the ability to initiate a decentralization effort does provide the minority party player with the opportunity to improve its payoffs in a decentralized setting.

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More About This Work

Academic Units
Political Science
Thesis Advisors
Ting, Michael M.
Degree
Ph.D., Columbia University
Published Here
January 29, 2025