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

Marco  Tabellini

Working Paper | HBS Working Paper Series | 2019

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

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 profile of several northern cities for the first time in American history. I exploit this episode to study how an increase in racial heterogeneity affects the provision of public goods and city finances. I predict black in-migration by interacting 1900 settlements of southern born blacks across northern cities with variation in outmigration from the South after 1910. I find that black inflows had a strong, negative impact on both public spending and tax revenues in northern cities. The decline in tax revenues was not due to cities’ decision to cut tax rates, but was entirely driven by a reduction in property values. These findings suggest that the housing market response to black arrivals imposed a negative fiscal externality to receiving cities that, unable or unwilling 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 effects of black in-migration were smaller when controlling for the (predicted) white outflows triggered by black arrivals.

Keywords: migration; Race; City; Financial Condition; Government and Politics; History; United States;

Language: English

Format: Print

68 pages

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Citation:

Tabellini, Marco. "Racial Heterogeneity and Local Government Finances: Evidence from the Great Migration." Harvard Business School Working Paper, No. 19-006, July 2018. (Revised September 2019. Featured in Harvard Magazine.)

This paper documents that disenfranchisement and discrimination discouraged WWII volunteer military participation of African American men, relative to Caucasian men, after the Pearl Harbor attack. The race-gap in volunteer enlistment is most pronounced in regions where discrimination was particularly severe. There is no gap in draft enlistment anywhere. Consistent with the notion that disenfranchisement and discrimination discourage military participation, we document that forcibly interred Japanese Americans were much less likely to serve in the U.S. military than those not interred.

Working Paper | HBS Working Paper Series | 2020

The Seeds of Ideology: Historical Immigration and Political Preferences in the United States

Paola Giuliano and Marco Tabellini

We test the relationship between historical immigration to the US and political ideology today. We hypothesize that European immigrants brought with them their preferences for the welfare state, and that this had a long-lasting effect on the political ideology of US born individuals. Our analysis proceeds in three steps. First, we document that the historical presence of European immigrants is associated with a more liberal political ideology and with stronger preferences for redistribution among US born individuals today. Next, we show that this correlation is not explained by the characteristics of the counties where immigrants settled or other specific, so- cioeconomic immigrants' traits. Finally, we provide evidence that our findings are driven by immigrants who had been more exposed to social-welfare reforms in their country of origin. Consistent with a mechanism of transmission from immigrants to natives, results are stronger when inter-group contact, measured with intermarriage and residential integration, was higher. Our findings also indicate that immigrants influenced American political ideology during one of the largest episodes of redistribution in US history – the New Deal – and that such effects persisted after the initial shock.

Keywords: political ideology; Immigration; History; Values and Beliefs; Welfare or Wellbeing; United States;

Citation:

Giuliano, Paola, and Marco Tabellini. "The Seeds of Ideology: Historical Immigration and Political Preferences in the United States." Harvard Business School Working Paper, No. 20-118, May 2020. (Revised November 2020. Available also from VOX, UCLA Anderson Review and in Weekendavisen.) View Details

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US voters exaggerate the differences in attitudes held by Republicans and Democrats on a range of socioeconomic and political issues. We examine the drivers and implications of such perceived partisan differences. We find that a model of stereotypes where distortions are stronger for issues that are more salient to voters captures important features of the data. First, perceived partisan differences are predictable from the actual differences across parties, in particular the relative prevalence of extreme attitudes. Second, perceived partisan differences are larger on issues that individuals consider more important. In particular, we show that the end of the Cold War in 1991, which shifted US voters’ attention away from external threats, led to an increase in perceived partisan differences in domestic issues, and more so for issues with more stereotypical partisan differences. The reverse pattern occurred after the terrorist attacks in 2001, when attention swung back towards external threats. Finally, the belief distortions we identify are quantitatively significant, and strongly predict voting turnout.

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

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