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Separate When Equal? Racial Inequality and Residential Segregation

  • Bayer, Patrick

    (Yale U)

  • Fang, Hanming
  • McMillan, Robert

    (U of Toronto)

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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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. Patrick Bayer & Robert McMillan & Kim Rueben, 2004. "Residential Segregation in General Equilibrium," Working Papers 885, Economic Growth Center, Yale University.
  2. Miller, Vincent P. & Quigley, John M., 1989. "Segregation by Racial and Demographic Group: Evidence from the San Francisco Bay Area," University of California Transportation Center, Working Papers qt5p86d7vw, University of California Transportation Center.
  3. Shelly Lundberg & Richard Startz, 1998. "Race, Information, and Segregation," Working Papers 0047, University of Washington, Department of Economics.
  4. Bayer, Patrick & McMillan, Robert & Rueben, Kim S., 2004. "What drives racial segregation? New evidence using Census microdata," Journal of Urban Economics, Elsevier, vol. 56(3), pages 514-535, November.
  5. Coate, Stephen & Loury, Glenn C, 1993. "Will Affirmative-Action Policies Eliminate Negative Stereotypes?," American Economic Review, American Economic Association, vol. 83(5), pages 1220-40, December.
  6. Rajiv Sethi & Rohini Somanathan, 2002. "Inequality and segregation," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 02-06, Indian Statistical Institute, New Delhi, India.
  7. Rajiv Sethi & Rohini Somanathan, 2001. "Racial Income Disparities and the Measurement of Segregation," Urban/Regional 0107001, EconWPA.
  8. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-93, May.
  9. David M. Cutler & Edward L. Glaeser & Jacob L. Vigdor, 1999. "The Rise and Decline of the American Ghetto," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 455-506, June.
  10. 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.
  11. Benabou, R., 1991. "Location, Education, and Production," Working papers 582, Massachusetts Institute of Technology (MIT), Department of Economics.
  12. 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.
  13. 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.
  14. 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.
  15. 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.
  16. Steven N. Durlauf, 1992. "A Theory of Persistent Income Inequality," NBER Working Papers 4056, National Bureau of Economic Research, Inc.
  17. 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.
  18. Vigdor, Jacob L., 2003. "Residential segregation and preference misalignment," Journal of Urban Economics, Elsevier, vol. 54(3), pages 587-609, November.
  19. Patrick Bayer & Robert McMillan, 2005. "Racial Sorting and Neighborhood Quality," NBER Working Papers 11813, National Bureau of Economic Research, Inc.
  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. Steven Berry & Joel Waldfogel, 2003. "Product Quality and Market Size," NBER Working Papers 9675, National Bureau of Economic Research, Inc.
  22. Weinberg, Bruce A., 2000. "Black Residential Centralization and the Spatial Mismatch Hypothesis," Journal of Urban Economics, Elsevier, vol. 48(1), pages 110-134, July.
  23. 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.
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