Does higher social diversity affect people's contributions to local schools? Evidence from New Zealand

New Zealand is becoming more socially diverse, in common with other Western countries. Primarily US-based evidence suggests that growing diversity may lower people's participation in society, and their contributions towards public goods. We test for evidence of a similar relationship in New Zealand, specifically between social diversity and voluntary contributions towards local schools. We use data from the New Zealand Ministry of Education and the Census to estimate whether social heterogeneity affects a school's ability to raise funds locally. Individual school revenue data is matched with measures of the heterogeneity of its neighbourhood. We consider heterogeneity by language, ethnicity, religion and income. Running cross-section and fixed effects regressions, which control for other factors, we find only limited evidence that diversity affects schools' local financial support. We do find that higher nominal household income inequality lowers school revenues from fundraising, but not revenues from parental contributions or donations.