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Residential Segregation in General Equilibrium

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Author Info
Patrick Bayer
Robert McMillan
Kim Rueben

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Abstract

Black households in the United States with high levels of income and education (SES) typically face a stark tradeoff when deciding where to live. They can choose neighborhoods with high levels of public goods or a high proportion of blacks, but very few neighborhoods combine both, a fact we document clearly. In the face of this constraint, we conjecture that racial sorting may dramatically lower the consumption of local public goods by high-SES blacks. To shed light on this, we estimate a model of residential sorting using unusually detailed restricted Census microdata, then use the estimated preferences to simulate a counterfactual world in which racial factors play no role in household residential location decisions. Results from this exercise provide the first evidence that sorting on the basis of race gives rise to significant reductions in the consumption of local public goods by black and high-SES black households in particular. These consumption effects lead to significant losses of welfare and are likely to have important intergenerational implications.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11095.

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Date of creation: Jan 2005
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Handle: RePEc:nbr:nberwo:11095

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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

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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. 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:
  3. J. Vernon Henderson & Yukako Ono, 2005. "Where Do Manufacturing Firms Locate Their Headquarters?," Working Papers 05-17, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
  4. 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:
  5. 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:
  6. 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!]
  7. 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!]
  8. 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)
  9. 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!]
  10. 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)
  11. 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)
  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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