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Separate When Equal? Racial Inequality and Residential Segregation

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  • Bayer, Patrick

    (Yale U)

  • Fang, Hanming
  • McMillan, Robert

    (U of Toronto)

Abstract

Standard intuition suggests that residential segregation in the United States will decline when racial inequality narrows. In this paper, we hypothesize that the opposite will occur. We note that middle-class black neighborhoods are in short supply in many U.S. metropolitan areas, forcing highly educated blacks either to live in predominantly white high-socioeconomic status (SES) neighborhoods or in more black lower-SES neighborhoods. Increases in the proportion of highly educated blacks in a metropolitan area may then lead to the emergence of new middle-class black neighborhoods, causing increases in residential segregation. We formalize this mechanism using a simple model of residential choice that permits endogenous neighborhood formation. Our primary empirical analysis, based on across-MSA evidence from the 2000 Census, indicates that this mechanism does indeed operate: as the proportion of highly educated blacks in an MSA increases, so the segregation of blacks at all education levels increases. Time-series evidence provides additional support for the hypothesis, showing that an increase in black educational attainment in a metropolitan area between 1990-2000 significantly increases segregation. Our analysis has important implications for the evolution of both residential segregation and racial socioeconomic inequality, drawing attention to a negative feedback loop likely to inhibit reductions in segregation and racial inequality over time.

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Bibliographic Info

Paper provided by Yale University, Department of Economics in its series Working Papers with number 9.

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Date of creation: Oct 2005
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Handle: RePEc:ecl:yaleco:9

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  1. Ihlanfeldt, Keith R. & Scafidi, Benjamin, 2002. "Black Self-Segregation as a Cause of Housing Segregation: Evidence from the Multi-City Study of Urban Inequality," Journal of Urban Economics, Elsevier, vol. 51(2), pages 366-390, March.
  2. Shelly Lundberg & Richard Startz, 1998. "Race, Information, and Segregation," Working Papers 0047, University of Washington, Department of Economics.
  3. Harsman, Bjorn & Quigley, John M., 1993. "The Spatial Segregation of Ethnic and Demographic Groups: Comparative Evidence from Stockholm and San Francisco," University of California Transportation Center, Working Papers qt910306b7, University of California Transportation Center.
  4. Patrick Bayer & Robert McMillan & Kim Rueben, 2005. "Residential Segregation in General Equilibrium," NBER Working Papers 11095, National Bureau of Economic Research, Inc.
  5. Miller, Vincent P. & Quigley, John M., 1990. "Segregation by Racial and Demographic Group: Evidence from the San Francisco Bay Area," University of California Transportation Center, Working Papers qt1839w13f, University of California Transportation Center.
  6. Cutler, David M & Glaeser, Edward L, 1997. "Are Ghettos Good or Bad?," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 827-72, August.
  7. Patrick J. Bayer & Robert McMillan & Kim Rueben, 2004. "What Drives Racial Segregation? New Evidence Using Census Microdata," Yale School of Management Working Papers ysm409, Yale School of Management.
  8. Patrick Bayer & Robert McMillan, 2005. "Racial Sorting and Neighborhood Quality," NBER Working Papers 11813, National Bureau of Economic Research, Inc.
  9. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-93, May.
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  12. Rajiv Sethi & Rohini Somanathan, 2004. "Inequality and Segregation," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1296-1321, December.
  13. Susan E. Mayer, 2000. "Income Inequality, Economic Segregation and Children's Educational Attainment," JCPR Working Papers 209, Northwestern University/University of Chicago Joint Center for Poverty Research.
  14. Benabou, R., 1991. "Location, Education, and Production," Working papers 582, Massachusetts Institute of Technology (MIT), Department of Economics.
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  16. Durlauf, S.N., 1992. "A Theory of Persistent Income Inequality," Papers 47, Stanford - Institute for Thoretical Economics.
  17. Weinberg, Bruce A., 2000. "Black Residential Centralization and the Spatial Mismatch Hypothesis," Journal of Urban Economics, Elsevier, vol. 48(1), pages 110-134, July.
  18. Glenn C. Loury, 1976. "A Dynamic Theory of Racial Income Differences," Discussion Papers 225, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  19. King, A Thomas & Mieszkowski, Peter, 1973. "Racial Discrimination, Segregation, and the Price of Housing," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 590-606, May-June.
  20. Ross, Stephen L., 1998. "Racial Differences in Residential and Job Mobility: Evidence Concerning the Spatial Mismatch Hypothesis," Journal of Urban Economics, Elsevier, vol. 43(1), pages 112-135, January.
  21. Vigdor, Jacob L., 2003. "Residential segregation and preference misalignment," Journal of Urban Economics, Elsevier, vol. 54(3), pages 587-609, November.
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  23. George C. Galster, 1982. "Black and White Preferences for Neighborhood Racial Composition," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 10(1), pages 39-66.
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Cited by:
  1. Veronica Guerrieri & Daniel Hartley & Erik Hurst, 2010. "Endogenous Gentrification and Housing Price Dynamics," NBER Working Papers 16237, National Bureau of Economic Research, Inc.
  2. Osiris Jorge, Parcero & Adolfo, Cristobal-Campoamor, 2009. "Dynamics of neighborhood formation and segregation by income," MPRA Paper 16936, University Library of Munich, Germany.
  3. Tugce Cuhadaroglu, 2013. "My Group Beats Your Group: Evaluating Non-Income Inequalities," Discussion Paper Series, Department of Economics 201308, Department of Economics, University of St. Andrews.
  4. Judith K. Hellerstein & Melissa P. McInerney & David Neumark, 2010. "Neighbors And Co-Workers:The Importance Of Residential Labor Market Networks," Working Papers 101, Department of Economics, College of William and Mary.
  5. Carlos Medina & Leonardo Morales & Jairo Nuñez, . "Quality of Life in Urban Neighborhoods in Colombia: The Cases of Bogotá and Medellín," Borradores de Economia 536, Banco de la Republica de Colombia.
  6. Elizabeth Oltmans Ananat, 2007. "The Wrong Side(s) of the Tracks Estimating the Causal Effects of Racial Segregation on City Outcomes," NBER Working Papers 13343, National Bureau of Economic Research, Inc.
  7. Anil Nathan, 2009. "Sorting and Statistical Discrimination in Schools: An Analysis Using the National Longitudinal Study of Adolescent Health," Working Papers 0905, College of the Holy Cross, Department of Economics.
  8. Patrick Bayer & Robert McMillan, 2005. "Racial Sorting and Neighborhood Quality," NBER Working Papers 11813, National Bureau of Economic Research, Inc.
  9. David Card & Alexandre Mas & Jesse Rothstein, 2007. "Tipping and the Dynamics of Segregation," NBER Working Papers 13052, National Bureau of Economic Research, Inc.
  10. Olof Aslund & Oskar Nordström Skans, 2010. "Will I See You at Work? Ethnic Workplace Segregation in Sweden, 1985-2002," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 63(3), pages 471-493, April.
  11. H. Spencer Banzhaf & Randall P. Walsh, 2010. "Segregation and Tiebout Sorting: Investigating the Link between Investments in Public Goods and Neighborhood Tipping," NBER Working Papers 16057, National Bureau of Economic Research, Inc.
  12. Dionissi Aliprantis & Daniel Carroll, 2012. "Neighborhood dynamics and the distribution of opportunity," Working Paper 1212, Federal Reserve Bank of Cleveland.

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