TY  - JOUR
AU  - Gordon,Nora
AU  - Knight,Brian
TI  - The Causes of Political Integration: An Application to School Districts
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12047
PY  - 2006
Y2  - February 2006
UR  - http://www.nber.org/papers/w12047
L1  - http://www.nber.org/papers/w12047.pdf
N1  - Author contact info:
Nora E. Gordon
Georgetown Public Policy Institute
306 Old North
37th and O Streets NW
Washington, DC 20057
Tel: 202/687-6756
E-Mail: neg24@georgetown.edu

Brian G. Knight
Brown University
Department of Economics, Box B
64 Waterman Street
Providence, RI 02912
Tel: 401/863-1584
Fax: 401/863-1970
E-Mail: Brian_Knight@brown.edu
AB  - This paper examines the forces behind political integration through the lens of school district consolidations, which reduced the number of school districts in the United States from around 130,000 in 1930 to under 15,000 at present. Despite this large observed decline, many districts resisted consolidation before ultimately merging and others never merged, choosing to remain at enrollment levels that nearly any education cost function would deem inefficiently small. Why do some districts voluntarily integrate while others remain small, and how do those districts that do merge choose with which of their neighbors to do so? In addressing these questions, we empirically examine the role of potential economies and diseconomies of scale, heterogeneity between merger partners, and the role of state governments. We first develop a simulation-based estimator that is rooted in the economics of matching and thus accounts for three important features of typical merger protocol: two-sided decision making, multiple potential partners, and spatial interdependence. We then apply this methodology to a wave of school district mergers in the state of Iowa during the 1990s. Our results highlight the importance of economies of scale, diseconomies of scale, state financial incentives for consolidation, and a variety of heterogeneity measures.
ER  -