Racial and spatial interaction for neighborhood dynamics in Chicago

We look at at the empirical validity of Schelling’s models for racial residential segregation applied to the case of Chicago. Most of the empirical literature has focused exclusively the single neighborhood model, also known as the tipping point model and neglected a multineighborhood approach or a unified approach. The multi-neighborhood approach introduced spatial interaction across the neighborhoods, in particular we look at spatial interaction across neighborhoods sharing a border. An initial exploration of the data indicates that spatial contiguity might be relevant to properly analyse the so call tipping phenomena of predominately non-Hispanic white neighborhoods to predominantly minority neighborhoods within a decade. We introduce an econometric model that combines an approach to estimate tipping point using threshold effects and a spatial autoregressive model. The estimation results from the model disputes the existence of a tipping point, that is a discontinuous change in the rate of growth of the non-Hispanic white population due to a small increase in the minority share of the neighborhood. In addition we find that racial distance between the neighborhood of interest and it surrounding neighborhoods has an important effect on the dynamics of racial segregation in Chicago.

Natural resource windfalls and efficiency of local government expenditures: evidence from Peru

We study the role of natural resource windfalls in explaining the efficiency of public expenditures. Using a rich dataset of expenditures and public good provision for 1,836 municipalities in Peru for period 2001-2010, we estimate a non-monotonic relationship between the efficiency of public good provision and the level of natural resource transfers. Local governments that were extremely favored by the boom of mineral prices were more efficient in using fiscal windfalls whereas those benefited with modest transfers were more inefficient. These results can be explained by the increase in political competition associated with the boom. However, the fact that increases in efficiency were related to reductions in public good provision casts doubts about the beneficial effects of political competition in promoting efficiency.