FINANCING PUBLIC GOODS AND THE DISTRIBUTION OF POPULATION IN A SYSTEM OF LOCAL GOVERNMENTS

Abstract
This paper develops a model of fiscally induced migration; it shows how the system of financing local public goods can affect the population distribution among towns in a metropolitan area. The model is used to construct a fiscal map which can be used to predict the relative change in population among towns. In analyzing the equilibrium and stability conditions of population distributions, we conclude that any equilibrium is likely to be temporary and unstable. The model was tested empirically. The actual shifts in population distribution among towns in the Harrisburg urbanized area for the periods 1950-60 and 1960-70 were compared to the changes predicted by the model. Since 69% of the population shifts from 1930 to I960 and 89% of the shifts from I960 to 1970 went in the predicted direction, apparently fiscal factors are significant in determining the direction of migration.