Ethnic Segregation and the Quality of Local Government in the Minorities Localities: Local Tax Collection in the Israeli-Arab Municipalities as a Case Study

The authors demonstrates the high costs of segregation in municipalities whose population includes a disadvantaged minority. The author focuses on a single fiscal performance indicator in the local authorities in Israel: local taxes collected in each locality as a share of local tax charges. The author found that this collection rate is substantially lower in Arab compared to Jewish localities, even after controlling for differences in socio-economic indicators and in various variables that affect tax exemptions and discounts. These findings are consistent with findings of studies in psychology, social work, and education that demonstrate that low motivation and poor self-efficacy of discriminated minorities may be reflected in inefficient – and sometimes destructive ??? behaviors.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=806904