We model a South African city during Apartheid (in which both schooling and mobility are restricted on the basis of race) and after Apartheid (in which no restrictions are imposed). We first show that the inequality between blacks and whites decreases when Apartheid laws are removed. Indeed, blacks are better off because of human capital externalities due to the possibility of mixing with white students whereas whites are worse off due to negative human capital externalities and intensified land market competition. After Apartheid, we also show that reducing the commuting costs of black children always increases the utility of black families and may even increase that of whites.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
2588.
Find related papers by JEL classification: I20 - Health, Education, and Welfare - - Education - - - General J70 - Labor and Demographic Economics - - Labor Discrimination - - - General R14 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Land Use Patterns
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