Population Heterogeneity and the Nonprofit Sector in the United States : Global versus Local Spatial Approaches

In this paper we study the relationship between the relative size of the U.S. nonprofit sector and population heterogeneity, at the county level, by adopting and extending the model of Alesina, Baquir and Easterly (1999). The relative size of the voluntary sector is assessed as a share of voluntary donations in the total public good provided locally via public expenditures and private contributions.We demonstrate empirically that the relative size of the nonprofitt sector in each county depends not only on its population heterogeneity, but also on its neighbors' average relative size of the nonprofit sector and average population heterogeneity. Moreover, this relationship seems to be unstable across counties as the signs and magnitudes of neighborhood effects vary with geographical location.