Interjurisdictional sorting and majority rule: An empirical analysis

The goal of this paper is to provide a comprehensive empirical analysis of majority rule and Tiebout sorting within a system of local jurisdictions. T he idea behind the estimation procedure is to investigate whether observed levels of public expenditures satisfy necessary conditions implied by major ity rule in a general equilibrium model of residential choice. The estimato r controls for observed and unobserved heterogeneity among households, obse rved and unobserved characteristics of communities, and the potential endog eneity of prices and expenditures, as well as the self-selection of househo lds into communities of their choice. We estimate the structural parameters of the model using data from the Boston Metropolitan Area. The empirical f indings reject myopic voting models. More sophisticated voting models based on utility-taking provide a potential explanation of the main empirical re gularities.