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Inequality and Segregation

  • Rajiv Sethi

    (Barnard College, Columbia University)

  • Rohini Somanathan

    (University of Michigan)

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.

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File URL: http://econwpa.repec.org/eps/mic/papers/0108/0108005.pdf
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Paper provided by EconWPA in its series Microeconomics with number 0108005.

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Length: 27 pages
Date of creation: 06 Sep 2001
Date of revision:
Handle: RePEc:wpa:wuwpmi:0108005
Note: Type of Document - Tex; prepared on IBM PC; to print on HP/PostScript/; pages: 27 ; figures: included
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Roland Benabou, 1991. "Workings of a City: Location, Education, and Production," NBER Technical Working Papers 0113, National Bureau of Economic Research, Inc.
  2. Fernandez, Raquel & Rogerson, Richard, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 135-64, February.
  3. Durlauf, Steven N, 1996. " A Theory of Persistent Income Inequality," Journal of Economic Growth, Springer, vol. 1(1), pages 75-93, March.
  4. 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.
  5. 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 110-33, February.
  6. 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.
  7. Bond, Eric W. & Coulson, N. Edward, 1989. "Externalities, filtering, and neighborhood change," Journal of Urban Economics, Elsevier, vol. 26(2), pages 231-249, September.
  8. Shelly Lundberg & Richard Startz, 1998. "Race, Information, and Segregation," Discussion Papers in Economics at the University of Washington 0047, Department of Economics at the University of Washington.
  9. Roland Benabou, 1993. "Heterogeneity, Stratification, and Growth," NBER Working Papers 4311, National Bureau of Economic Research, Inc.
  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.
  11. Amitabh Chandra, 2003. "Is the Convergence of the Racial Wage Gap Illusory?," NBER Working Papers 9476, National Bureau of Economic Research, Inc.
  12. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-93, May.
  13. David M. Cutler & Edward L. Glaeser, 1995. "Are Ghettos Good or Bad?," NBER Working Papers 5163, National Bureau of Economic Research, Inc.
  14. 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.
  15. 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.
  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. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-58, August.
  18. Nancy A. Denton & Douglas S. Massey, . "Residential Segregation of Blacks, Hispanics, and Asians by Socioeconomic Status and Generation," University of Chicago - Population Research Center 88-2, Chicago - Population Research Center.
  19. Rajiv Sethi & Rohini Somanathan, 2001. "Racial Income Disparities and the Measurement of Segregation," Urban/Regional 0107001, EconWPA.
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