Inequality and Segregation
AbstractThis paper explores the manner in which race and income interact to determine patterns of residential location in metropolitan areas. We use a framework in which individuals care about both the level of affluence and the racial composition of their communities, and in which there are differences in income both within and between groups. Three main findings emerge. First, conditional on income, black households experience lower neighborhood quality relative to whites at any stable equilibrium. Second, extreme levels of segregation can be stable when racial income disparities are either large or negligible, but unstable in some intermediate range. Third, there exist multiple stable equilibria with very different levels of segregation when racial income disparities are sufficiently small. These results hold even when preferences are pro-integrationist, in the sense that racially mixed neighborhoods within a certain range are strictly preferred by all households to homogenous neighborhoods of either type.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 112 (2004)
Issue (Month): 6 (December)
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Web page: http://www.journals.uchicago.edu/JPE/
Other versions of this item:
- Rajiv Sethi & Rohini Somanathan, 2001. "Inequality and Segregation," Microeconomics 0108005, EconWPA.
- Rajiv Sethi & Rohini Somanathan, 2004. "Inequality and segregation," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 04-03, Indian Statistical Institute, New Delhi, India.
- Rajiv Sethi & Rohini Somanathan, 2002. "Inequality and segregation," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 02-06, Indian Statistical Institute, New Delhi, India.
- D1 - Microeconomics - - Household Behavior
- D2 - Microeconomics - - Production and Organizations
- D3 - Microeconomics - - Distribution
- D4 - Microeconomics - - Market Structure and Pricing
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