Socioeconomic and demographic determinants of the votes for mergers of municipalities

This paper is an extension of Tanguay and Wihry (2008), where they use the results of the 2004 Quebec referenda on the mergers of municipalities, in order to identify the determinants of voters’ preferences regarding municipal fragmentation. Holding constant the influences of language and of a unit's share of the merged population, their multivariate analysis shows that voters are more likely to support de-merger when: i) they expect that the merged unit will display a different public expenditure level than that of the municipality in which they reside and ii) they expect de-merger to decrease the tax-price of local public services. Based on the study of Alesina, Baqir and Easterly (1999), we modify the model used by Tanguay and Wihry and include race and religion fractionalization indexes in our econometric analysis in order to study how racial and religious heterogeneities influenced the outcomes of the votes. These changes are motivated by the recent literature which demonstrates that public spending, public policies, and political outcomes can be influenced by racial and religious heterogeneities. Moreover, as shown in Alesina and La Ferrera (2000), ethnic fragmentation might be endogenous with income segregation, and thus yields to reduce social interaction or the level of trust among communities. We find that municipalities with higher racial or religious fractionalization tend to have a higher proportion of de-merger supporters.