THE POLITICAL ECONOMY OF URBAN SERVICE DISTRIBUTION: A TEST OF THE UNDERCLASS HYPOTHESIS

Both political scientists and urban economists have neglected the relationship between the distribution of the tax incidence of properly tax supported municipal services and the distribution of service benefits among neighborhoods. This article directs inquiry into the “underclass hypothesis” by identifying the distribution of service benefits and tax burdens for elementary education services in a medium size city and relating service benefits and burdens to neighborhood socio-economic status. The analysis demonstrates that while service benefits (especially expenditures) are likely to be distributed uniformly among sub-areas of a city, the distribution of tax benefits is regressive. The result is an overall regressive distribution of service benefits/burdens. In conclusion, two explanations for this regressive distribution are explored.