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Inequality and segregation

Author

Listed:
  • Rajiv Sethi

    (Columbia University)

  • Rohini Somanathan

    (Indian Statistical Institute, New Delhi)

Abstract

This paper explores the manner in which race and income interact to determine patterns of residential location in metropolitan areas. We use a framework in which individuals care about both the level of affluence and the racial composition of their communities, and in which there are differences in income both within and between groups. Three main findings emerge. First, conditional on income, black households experience lower neighborhood quality relative to whites at any stable equilibrium. Second, extreme levels of segregation can be stable when racial income disparities are either large or negligible, but unstable in some intermediate range. Third, there exist multiple stable equilibria with very different levels of segregation when racial income disparities are sufficiently small. These results hold even when preferences are pro-integrationist, in the sense that racially mixed neighborhoods within a certain range are strictly preferred by all households to homogenous neighborhoods of either type.

Suggested Citation

  • Rajiv Sethi & Rohini Somanathan, 2002. "Inequality and segregation," Discussion Papers 02-06, Indian Statistical Institute, Delhi.
  • Handle: RePEc:alo:isipdp:02-06
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    File URL: http://www.isid.ac.in/~planning/workingpapers/dp02-06.pdf
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations
    • D3 - Microeconomics - - Distribution
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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