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Segregation and Racial Preferences: New Theoretical and Empirical Approaches

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  • Stephen L. Ross

    (University of Connecticut)

Abstract

This paper investigates the role of preferences for social interactions or outcomes in determining observed patterns of racial segregation. In the theoretical section, consumers maximize utility by allocating time between personal time and social interactions within their neighborhood, and the dual of this problem is used to investigate the bidding and sorting of households over racial composition. The models suggests that African-American households may outbid white households to reside in white neighborhoods, and unlike previous models of segregation this model is consistent with either racial segregation or integration. In the empirical analysis, proxy variables are developed for unobservable attributes that enter household preferences based on measures of household outcomes and satisfaction, and then specifies an econometric model of residential location choice using those attributes. The paper finds evidence that racial differences in preferences for education can explain a substantial portion, but not all, of the racial segregation observed in 1985 Philadelphia using data from the American Housing Survey.

Suggested Citation

  • Stephen L. Ross, 2002. "Segregation and Racial Preferences: New Theoretical and Empirical Approaches," Working papers 2002-04, University of Connecticut, Department of Economics, revised Apr 2003.
  • Handle: RePEc:uct:uconnp:2002-04
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    References listed on IDEAS

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    1. Kevin Lang, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 363-382.
    2. 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.
    3. Shelly Lundberg & Richard Startz, 1998. "Race, Information, and Segregation," Working Papers 0047, University of Washington, Department of Economics.
    4. Ann B. Schnare & C. Duncan MacRae, 1978. "The Dynamics of Neighbourhood Change," Urban Studies, Urban Studies Journal Limited, vol. 15(3), pages 327-331, October.
    5. Schafer, Robert, 1979. "Racial discrimination in the Boston housing market," Journal of Urban Economics, Elsevier, vol. 6(2), pages 176-196, April.
    6. John Yinger, 1978. "The Black-White Price Differential in Housing: Some Further Evidence," Land Economics, University of Wisconsin Press, vol. 54(2), pages 187-206.
    7. 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.
    8. Borjas, George J., 1998. "To Ghetto or Not to Ghetto: Ethnicity and Residential Segregation," Journal of Urban Economics, Elsevier, vol. 44(2), pages 228-253, September.
    9. Gabriel, Stuart A & Rosenthal, Stuart S, 1989. "Household Location and Race: Estimates of Multinomial Logit Model," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 240-249, May.
    10. Deng, Yongheng & Ross, Stephen L. & Wachter, Susan M., 2003. "Racial differences in homeownership: the effect of residential location," Regional Science and Urban Economics, Elsevier, vol. 33(5), pages 517-556, September.
    11. James R. Follain JR & Stephen Malpezzi, 1981. "Another Look at Racial Differences in Housing Prices," Urban Studies, Urban Studies Journal Limited, vol. 18(2), pages 195-203, June.
    12. Courant, Paul N., 1978. "Racial prejudice in a search model of the urban housing market," Journal of Urban Economics, Elsevier, vol. 5(3), pages 329-345, July.
    13. Zenou, Yves & Boccard, Nicolas, 2000. "Racial Discrimination and Redlining in Cities," Journal of Urban Economics, Elsevier, vol. 48(2), pages 260-285, September.
    14. Kern, Clifford R., 1981. "Racial prejudice and residential segregation: The Yinger model revisited," Journal of Urban Economics, Elsevier, vol. 10(2), pages 164-172, September.
    15. David M. Cutler & Edward L. Glaeser, 1997. "Are Ghettos Good or Bad?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 827-872.
    16. Yinger, John, 1976. "Racial prejudice and racial residential segregation in an urban model," Journal of Urban Economics, Elsevier, vol. 3(4), pages 383-396, October.
    17. Roland Benabou, 1993. "Workings of a City: Location, Education, and Production," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 619-652.
    18. de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-133, February.
    19. Ann B. Schnare, 1976. "Racial and Ethnic Price Differentials in an Urban Housing Market," Urban Studies, Urban Studies Journal Limited, vol. 13(2), pages 107-120, June.
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    Cited by:

    1. Weinberg, Bruce A., 2013. "Group design with endogenous associations," Regional Science and Urban Economics, Elsevier, vol. 43(2), pages 411-421.
    2. Bruce A. Weinberg, 2007. "Social Interactions with Endogenous Associations," NBER Working Papers 13038, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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