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Residential Segregation in General Equilibrium

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Author Info
Patrick Bayer () (Economic Growth Center, Yale University)
Robert McMillan
Kim Rueben

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Abstract

This paper studies the causes and consequences of racial segregation using a new general equilibrium model that treats neighborhood compositions as endogenous. The model is estimated using unusually detailed restricted Census microdata covering the entire San Francisco Bay Area, and in combination with a rich array of econometric estimates, serves as a powerful tool for carrying out counterfactual simulations that shed light on the causes and consequences of segregation. In terms of causes, and contrasting with prior research, our GE simulations indicate that equalizing income and education across race would be unlikely to result in significant reductions in racial segregation, as minority households would sort into newly formed minority neighborhoods. Indeed, among Asian and Hispanic households, segregation increases. In terms of consequences, this paper provides the first evidence that sorting on the basis of race gives rise to significant reductions in the consumption of local public goods by minority households and upper-income minority households in particular. These consumption effects are likely to have important intergenerational implications.

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Publisher Info
Paper provided by Economic Growth Center, Yale University in its series Working Papers with number 885.

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Length: 45 pages
Date of creation: May 2004
Date of revision:
Handle: RePEc:egc:wpaper:885

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Related research
Keywords: Segregation; General Equilibrium; Endogenous Sorting; Urban Housing Market; Locational Equilibrium; Counterfactual Simulation; Discrete Choice;

Other versions of this item:

Find related papers by JEL classification:
H0 - Public Economics - - General
J7 - Labor and Demographic Economics - - Labor Discrimination
R0 - Urban, Rural, and Regional Economics - - General
R2 - Urban, Rural, and Regional Economics - - Household Analysis

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  22. 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. [Downloadable!]
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  35. Dennis Epple & Thomas Romer & Holger Sieg, 2001. "Interjurisdictional Sorting and Majority Rule: An Empirical Analysis," Econometrica, Econometric Society, vol. 69(6), pages 1437-1465, November. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stephen L. Ross, 2005. "The Continuing Practice and Impact of Discrimination," Working papers 2005-19, University of Connecticut, Department of Economics, revised Jul 2006. [Downloadable!]
  2. Shelly Lundberg & Richard Startz, 2007. "Information and racial exclusion," Journal of Population Economics, Springer, vol. 20(3), pages 621-642, July. [Downloadable!] (restricted)
    Other versions:
  3. Patrick Bayer & Robert McMillan & Kim Rueben, 2004. "An Equilibrium Model of Sorting in an Urban Housing Market," NBER Working Papers 10865, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Robert Bifulco & Helen F. Ladd & Stephen Ross, 2007. "Public School Choice and Integration: Evidence from Durham, North Carolina," Working papers 2007-41, University of Connecticut, Department of Economics, revised Jun 2008. [Downloadable!]
    Other versions:
  5. Patrick Bayer & Hanming Fang & Robert McMillan, 2005. "Separate When Equal? Racial Inequality and Residential Segregation," NBER Working Papers 11507, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. J. Vernon Henderson & Yukako Ono, 2004. "Where do manufacturing firms locate their headquarters?," Working Paper Series WP-04-29, Federal Reserve Bank of Chicago. [Downloadable!]
    Other versions:
  7. Leah Platt Boustan, 2007. "Was Postwar Suburbanization "White Flight"? Evidence from the Black Migration," NBER Working Papers 13543, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Stephen L. Ross, 2008. "Understanding Racial Segregation: What is known about the Effect of Housing Discrimination," Working papers 2008-15, University of Connecticut, Department of Economics, revised Nov 2008. [Downloadable!]
  9. Mohammad Arzaghi, 2005. "Quality Sorting and Networking: Evidence from the Advertising Agency Industry," Working Papers 05-16, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  10. Thomas J. Kane & Douglas O. Staiger & Stephanie K. Riegg, 2005. "School Quality, Neighborhoods and Housing Prices: The Impacts of school Desegregation," NBER Working Papers 11347, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Miguel Urquiola, 2005. "Does School Choice Lead to Sorting? Evidence from Tiebout Variation," American Economic Review, American Economic Association, vol. 95(4), pages 1310-1326, September. [Downloadable!]
  12. J. Vernon Henderson & Mohammad Arzaghi, 2005. "Networking Off Madison Avenue," Working Papers 05-15, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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