Residential Segregation in General Equilibrium

Patrick Bayer, Robert McMillan and Kim Rueben

Working Papers from Economic Growth Center, Yale University

Abstract: This paper studies the causes and consequences of racial segregation using a new general equilibrium model that treats neighborhood compositions as endogenous. The model is estimated using unusually detailed restricted Census microdata covering the entire San Francisco Bay Area, and in combination with a rich array of econometric estimates, serves as a powerful tool for carrying out counterfactual simulations that shed light on the causes and consequences of segregation. In terms of causes, and contrasting with prior research, our GE simulations indicate that equalizing income and education across race would be unlikely to result in significant reductions in racial segregation, as minority households would sort into newly formed minority neighborhoods. Indeed, among Asian and Hispanic households, segregation increases. In terms of consequences, this paper provides the first evidence that sorting on the basis of race gives rise to significant reductions in the consumption of local public goods by minority households and upper-income minority households in particular. These consumption effects are likely to have important intergenerational implications.

Keywords: Segregation; General Equilibrium; Endogenous Sorting; Urban Housing Market; Locational Equilibrium; Counterfactual Simulation; Discrete Choice (search for similar items in EconPapers)
JEL-codes: H0 J7 R0 R2 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2004-05
New Economics Papers: this item is included in nep-dcm, nep-edu, nep-geo, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Related works:
Working Paper: Residential Segregation in General Equilibrium (2005)
Working Paper: Residential Segregation in General Equilibrium (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:egc:wpaper:885

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