Residential Segregation in General Equilibrium / Patrick Bayer, Robert McMillan, Kim Rueben.

Format:

Book

Author/Creator:

Bayer, Patrick.

Contributor:

McMillan, Robert.

Rueben, Kim S.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11095.

NBER working paper series no. w11095

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

Black households in the United States with high levels of income and education (SES) typically face a stark tradeoff when deciding where to live. They can choose neighborhoods with high levels of public goods or a high proportion of blacks, but very few neighborhoods combine both, a fact we document clearly. In the face of this constraint, we conjecture that racial sorting may dramatically lower the consumption of local public goods by high-SES blacks. To shed light on this, we estimate a model of residential sorting using unusually detailed restricted Census microdata, then use the estimated preferences to simulate a counterfactual world in which racial factors play no role in household residential location decisions. Results from this exercise provide the first evidence that sorting on the basis of race gives rise to significant reductions in the consumption of local public goods by black and high-SES black households in particular. These consumption effects lead to significant losses of welfare and are likely to have important intergenerational implications.

Notes:

January 2005.

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