Local Public Goods and Jim Crow

Labor market discrimination and racial segregation can be viewed as part of a more general tendency for residents of a community to limit the community's size or its factor-ownership composition. Statutory segregation is motivated not only by racial prejudice, but also by a desire to maximize factor incomes and the average net benefit obtained from local-public-goods consumption. Race is one of many possible devices that might be used to distinguish community members from non-members. Predictions for racial discrimination and segregation derived from this local-public-goods approach are tested with data from the Jim Crow era.