Separate, Unequal, and Ignored? Interjurisdictional Competition and the Budgetary Choices of Poor and Affluent Municipalities

Abstract

The fundamental value underlying the design of a fragmented system of local governance is consumer sovereignty. This system functions as a market‐like arrangement providing citizen‐consumers a choice of jurisdictions that offer different bundles of public services and taxes. However, the same choice also can facilitate class‐based population sorting, creating regions where fiscally wealthy jurisdictions coexist with impoverished ones. Some argue that the public market enhances the power of all consumers, whether poor or rich. Even if the poor are concentrated in some jurisdictions, they can exercise their voice to ensure that their government responds to their service needs. But does the voice of the poor matter as much as the voice of the rich in determining service levels in the local public market? Comparing the budgetary choices in poor and affluent municipalities, this article shows that in highly fragmented regions, some municipal services are provided the least in communities where they are needed the most.

Interjurisdictional Competition and Intracity Fiscal Disparity across Chinese Prefectural Cities

“…The local leaders compete fiercely for a limited number of promotion chances, mainly depending on their fiscal performance (Liu and Martinez‐Vazquez ; Lü and Landry ; Zhang ). Since the total number of local governments depends on the size of population, the number of local (county‐level) governments standardized by population is often used as a measurement for local government competition in U.S. studies (Hendrick et al ; Jimenez ). As both the total number of local governments and relocation of businesses depend on the geographic area, we also include the total number of governments per 10,000 square kilometers to measure the degree of competition (Zax ).…”

“…Therefore, researchers argue that the competition among fragmented governments reinforces the disparity by promoting and protecting unequal distribution of public resources (Bischoff ; Lewis and Hamilton ; Rusk ). Further, governmental competition forces the local governments to prioritize their spending on development and economic growth, instead of redistributive services (Jimenez ; Peterson ).…”

Social Context, Institutional Capacity, and Police Services: A Local Public Economies Perspective

“…Data for metropolitan disparities, interlocal cooperation, state aid, and federal aid are collected from the Census of Governments of 1982Governments of , 1992Governments of , 2002Governments of , and 2012 Control variables account for demographic characteristics underlying demand for services. Basic control variables include median income, population, population squared, fraction of residents aged under 18 years, and fraction of residents aged 65 and over (Alesina, Baqir, and Easterly 1999 ;Jimenez 2014 ). Data for these variables are collected from the Census of Population of 1980, 1990, 2000, and 2010, and the 2008-12 American Community Survey estimate for income.…”

“…It ranges from a minimum of zero to a maximum of 0.666. Please see Jimenez ( 2014 ) for literature employing this index. Source: Census of Population, 1980Population, , 1990Population, , 2000Population, , 2010 0.166 (0.169)…”

“…In other words, a few municipalities will be able to collect disproportionate shares of revenues compared with the rest of municipalities in the metropolitan area. Wide disparities have a restrictive effect on municipalities whose fiscal capacity is lower relative to other municipalities (Jimenez ). Disparities resulting from the lower fiscal capacity of affected municipalities could thus diminish levels of municipal policing.…”