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Inequality and Segregation

Author

Listed:
  • Rajiv Sethi

    (Barnard College, Columbia University)

  • Rohini Somanathan

    (University of Michigan)

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, 2001. "Inequality and Segregation," Microeconomics 0108005, EconWPA.
  • Handle: RePEc:wpa:wuwpmi:0108005
    Note: Type of Document - Tex; prepared on IBM PC; to print on HP/PostScript/; pages: 27 ; figures: included
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    References listed on IDEAS

    as
    1. Nancy A. Denton & Douglas S. Massey, "undated". "Residential Segregation of Blacks, Hispanics, and Asians by Socioeconomic Status and Generation," University of Chicago - Population Research Center 88-2, Chicago - Population Research Center.
    2. Epple, Dennis & Platt, Glenn J., 1998. "Equilibrium and Local Redistribution in an Urban Economy when Households Differ in both Preferences and Incomes," Journal of Urban Economics, Elsevier, vol. 43(1), pages 23-51, January.
    3. Shelly Lundberg & Richard Startz, 1998. "Race, Information, and Segregation," Working Papers 0047, University of Washington, Department of Economics.
    4. Durlauf, Steven N, 1996. "A Theory of Persistent Income Inequality," Journal of Economic Growth, Springer, vol. 1(1), pages 75-93, March.
    5. 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.
    6. Benabou, R., 1992. "Heterogeneity, Stratification, and Growth," Working papers 93-4, Massachusetts Institute of Technology (MIT), Department of Economics.
    7. Rajiv Sethi & Rohini Somanathan, 2001. "Racial Income Disparities and the Measurement of Segregation," Urban/Regional 0107001, EconWPA.
    8. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-858, August.
    9. Raquel Fernandez & Richard Rogerson, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 135-164.
    10. 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.
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    12. Amitabh Chandra, 2003. "Is the Convergence of the Racial Wage Gap Illusory?," NBER Working Papers 9476, National Bureau of Economic Research, Inc.
    13. 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.
    14. Denton, N.A. & Massey, D.S., 1988. "Residential Segregation Of Blacks, Hispanics, And Asians By Socioeconomic Status And Generation," University of Chicago - Economics Research Center 88-2, Chicago - Economics Research Center.
    15. 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.
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    18. 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.
    19. 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.
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    More about this item

    Keywords

    Race; Inequality; Segregation;

    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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