Are Ghettos Good or Bad? Evidence from U.S. Internal Migration

Junfu Zhang and Liang Zheng

No 8093, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: It is difficult to determine whether ghettos are good or bad, partly because racial segregation may have some effects that are unobservable. To overcome this challenge, we present a migration choice model that allows for estimating the overall effects of racial segregation. The key idea underlying our empirical approach is that if segregation indeed has a negative overall effect, migrants should be willing to give up some earnings to avoid living in segregated cities. Using decennial census data from 1980 to 2000, we provide new evidence that ghettos are bad. It is shown that both black and white migrants prefer to live in less segregated cities. For example, for a one-percentage-point reduction in the dissimilarity index, the estimated marginal willingness to pay of blacks is $436 (in 1999 dollars) in 2000. Among whites, this marginal willingness to pay is $301.

Keywords: internal migration; residential segregation; discrete choice model (search for similar items in EconPapers)
JEL-codes: O15 R12 R23 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2014-04
New Economics Papers: this item is included in nep-dcm, nep-mig and nep-ure
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Published - revised version published as 'Are People Willing to Pay for Less Segregation? Evidence from U.S. Internal Migration' in: Regional Science and Urban Economics, 2015, 53, 97-112

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