This paper examines the relationship between Education spending and diversity by analysing the impact of Ethnic Fractionalisation on Public and Private education expenditure using empirical approaches for panel data. Private education spending is included to observe whether it changes due to diversity as an alternate indicator for changes in citizens' social preferences due to Ethnic Fragmentation. We observe that variables based on macroeconomic stipulations do not coincide between Public and Private education spending. We find that a 1 standard deviation rise in ethnic fractionalisation significantly increases public education spending by 0.241%, whereas the change in private education spending is insignificant, whereas the prior is inconsistent with research evidence. Countries with high inequality are found to be insensitive to changes in diversity, in assessment the converse is true; countries with low inequality tend to have increased public education spending. These findings are subject to omitted variable bias and hence require alterations. Further extensions imply there is no significant change in public education spending, and private education spending increases by 2.114% due to a 1 unit increase in ethnic fractionalisation. These findings are consistent with the literature and hence leave room for further research. The sections below go through the Economic Theory utilised in our empirical research, then the literature is reviewed to survey previous papers and findings regarding our topic. The 3rd and 4th sections discuss the econometric theory and empirical analysis of results respectively.

We present a model that links heterogeneity of preferences across ethnic groups in a city to the amount and type of public good the city supplies. We test the implications of the model with three related datasets: US cities, US metropolitan areas, and US urban counties. Results show that productive public goods -- education, roads, libraries, sewers and trash pickup -- in US cities (metro areas/urban counties) are inversely related to the city's (metro area's/county's) ethnic fragmentation, even after controlling for other socioeconomic and demographic determinants. Ethnic fragmentation is negatively related to the share of local spending on welfare. The results are mainly driven by observations in which majority whites are reacting to varying sizes of minority groups. We conclude that ethnic conflict is an important determinant of local public finances.

In the public finance literature it is well understood that a community's spending can be affected by neighboring communities' spending. It is relatively straightforward to see why these spillovers exist. For example, if a school district increases its spending on public education, this could affect the spending level of neighboring school districts. This paper uses spatial analysis to test the hypothesis that a school district's ethnic heterogeneity affects support for public education. Using a Spatial Lag Model and a national panel of U.S. school districts, I find that spatial dependence does exist in the data and that ethnic heterogeneity is negatively related to school district spending.

Recent research demonstrates that the quality of public institutions is crucial for a number of important environmental, social, economic, and political outcomes, and thereby human well-being. The Quality of Government (QoG) approach directs attention to issues such as impartiality in the exercise of public power, professionalism in public service delivery, effective measures against corruption, and meritocracy instead of patronage and nepotism. This Handbook offers a comprehensive, state-of-the-art overview of this rapidly expanding research field and also identifies viable avenues for future research. The initial chapters focus on theoretical approaches and debates, and the central question of how QoG can be measured. A second set of chapters examines the wealth of empirical research on how QoG relates to democratization, social trust and cohesion, ethnic diversity, happiness and human wellbeing, democratic accountability, economic growth and inequality, political legitimacy, environmental sustainability, gender equality, and the outbreak of civil conflicts. The remaining chapters turn to the perennial issue of which contextual factors and policy approaches—national, local, and international—have proven successful (and not so successful) for increasing QoG. The Quality of Government approach both challenges and complements important strands of inquiry in the social sciences. For research about democratization, QoG adds the importance of taking state capacity into account. For economics, the QoG approach shows that in order to produce economic prosperity, markets need to be embedded in institutions with a certain set of qualities. For development studies, QoG emphasizes that issues relating to corruption are integral to understanding development writ large.

Using a Two-Stage Least Squares procedure, we estimate the relationship between ethnic fragmentation and police spending using a cross-section of United States counties. Our results show that, when controlling for community characteristics and accounting for simultaneity bias, ethnic fragmentation is positively related to police spending. Our paper contributes to the understanding of the stylized fact that public spending on police increased over a period in which the incidence of crime decreased.