KEEPING PEOPLE OUT - INCOME-DISTRIBUTION, ZONING, AND THE QUALITY OF PUBLIC-EDUCATION

We examine the effect of community zoning regulations on allocations a nd welfare in a two-community model. Individuals choose in which commu nity to live and each community levies a tax, chosen via majority vote , on local property to finance local public education. We study both e xogenously specified and endogenously chosen zoning regulations. In eq uilibrium, the two communities are stratified by income. Theoretical a nalysis indicates that a number of outcomes are possible. Several inte resting results emerge: Zoning tends to make the richer community more exclusive, but the gap between education expenditures may decrease. M oreover, welfare effects are not monotone in income.