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Racial Segregation in Housing Markets and the Erosion of Black Wealth

Author

Listed:
  • Prottoy A. Akbar

    (Aalto University and Helsinki Graduate School of Economics)

  • Sijie Li Hickly

    (Freddie Mac)

  • Allison Shertzer

    (Federal Reserve Bank of Philadelphia)

  • Randall P. Walsh

    (University of Pittsburgh and NBER)

Abstract

This paper studies how the expansion of segregated neighborhoods eroded black wealth in prewar American cities. Using a novel sample of matched addresses, we find that over a single decade rental prices soared by roughly 50% on city blocks that transitioned from all white to majority black. Meanwhile, pioneering black families paid a 28% premium to buy a home on a majority white block, after which their homes lost 10% of their value. These findings strongly suggest that segregated housing markets cost black families much of the gains associated with moving north during the Great Migration.

Suggested Citation

  • Prottoy A. Akbar & Sijie Li Hickly & Allison Shertzer & Randall P. Walsh, 2025. "Racial Segregation in Housing Markets and the Erosion of Black Wealth," The Review of Economics and Statistics, MIT Press, vol. 107(1), pages 42-54, January.
    • Handle: RePEc:tpr:restat:v:107:y:2025:i:1:p:42-54
    DOI: 10.1162/rest_a_01276
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    Citations

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    Cited by:

    1. is not listed on IDEAS
    2. Peter Christensen & Ignacio Sarmiento-Barbieri & Christopher Timmins, 2021. "Racial Discrimination and Housing Outcomes in the United States Rental Market," NBER Working Papers 29516, National Bureau of Economic Research, Inc.
    3. Ran Abramitzky & Leah Platt Boustan & Dylan Connor, 2020. "Leaving the Enclave: Historical Evidence on Immigrant Mobility from the Industrial Removal Office," Working Papers 2020-35, Princeton University. Economics Department..
    4. Ellora Derenoncourt & Chi Hyun Kim & Moritz Kuhn & Moritz Schularick, 2024. "Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860–2020," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(2), pages 693-750.
    5. Fishback, Price & Rose, Jonathan & Snowden, Kenneth A. & Storrs, Thomas, 2024. "New Evidence on Redlining by Federal Housing Programs in the 1930s," Journal of Urban Economics, Elsevier, vol. 141(C).
    6. LaVoice, Jessica & Vamossy, Domonkos F., 2024. "Racial disparities in debt collection," Journal of Banking & Finance, Elsevier, vol. 164(C).
    7. Jones, Maggie E.C. & Logan, Trevon D. & Rosé, David & Cook, Lisa D., 2024. "Black-Friendly businesses in cities during the Civil Rights Era," Journal of Urban Economics, Elsevier, vol. 141(C).
    8. Shertzer, Allison & Twinam, Tate & Walsh, Randall P., 2022. "Zoning and segregation in urban economic history," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    9. Peter Christensen & Ignacio Sarmiento-Barbieri & Christopher Timmins, 2022. "Housing Discrimination and the Toxics Exposure Gap in the United States: Evidence from the Rental Market," The Review of Economics and Statistics, MIT Press, vol. 104(4), pages 807-818, October.
    10. Ran Abramitzky & Leah Platt Boustan & Dylan Connor, 2020. "Leaving the Enclave: Historical Evidence on Immigrant Mobility from the Industrial Removal Office," NBER Working Papers 27372, National Bureau of Economic Research, Inc.
    11. Sean Lewis-Faupel & Nicholas Tenev, 2024. "Racial and Ethnic Disparities in Mortgage Lending: New Evidence from Expanded HMDA Data," Papers 2405.00895, arXiv.org.
    12. Chapelle, Guillaume & Domènech Arumí, Gerard & Gobbi, Paula Eugenia, 2023. "Housing, Neighborhoods and Inequality," CEPR Discussion Papers 17969, Centre for Economic Policy Research.
    13. Juan Carlos Lopez, 2022. "Will Increasing Housing Supply Reduce Urban Inequality?," International Regional Science Review, , vol. 45(4), pages 383-416, July.
    14. Matthew E. Kahn, 2024. "Racial and ethnic differences in the financial returns to home purchases," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 52(3), pages 908-927, May.

    More about this item

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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