NBER WORKING PAPER SERIES INEQUALITY AND THE MEASUREMENT OF RESIDENTIAL SEGREGATION BY INCOME IN AMERICAN NEIGHBORHOODS

American metropolitan areas have experienced rising residential segregation by income since 1970. One potential explanation for this change is growing income inequality. However, measures of residential sorting are typically mechanically related to the income distribution, making it difficult to identify the impact of inequality on residential choice. This paper presents a measure of residential segregation by income, the Centile Gap Index (CGI) which is based on income percentiles. Using the CGI, I find that a one standard deviation increase in income inequality raises residential segregation by income by 0.4-0.9 standard deviations. Inequality at the top of the distribution is associated with more segregation of the rich, while inequality at the bottom and declines in labor demand for less-skilled men are associated with residential isolation of the poor. Inequality can fully explain the rise in income segregation between 1970 and 2000.

[1]  Paul A. Jargowsky,et al.  Take the money and run: economic segregation in U.S. metropolitan areas. , 1996 .

[2]  T. Davido.  Income Sorting: Measurement and Decomposition , 2003 .

[3]  S. Machin.  An Appraisal of Economic Research on Changes in Wage Inequality , 2008 .

[4]  Yannis M. Ioannides.  NEIGHBORHOOD INCOME DISTRIBUTIONS , 2004 .

[5]  Douglas S. Massey,et al.  The age of extremes: Concentrated affluence and poverty in the twenty-first century , 1996, Demography.

[6]  Mary J. Fischer.  Shifting Geographies , 2008 .

[7]  Paul A. Jargowsky,et al.  Poverty and Place: Ghettos, Barrios, and the American City , 1998 .

[8]  Dennis Epple,et al.  Equilibrium and Local Redistribution in an Urban Economy when Households Differ in both Preferences and Incomes , 1998 .

[9]  Mary J. Fischer,et al.  The Geography of Inequality in the United States, 1950-2000 , 2003 .

[10]  Matthew E. Kahn,et al.  Why do the poor live in cities? The role of public transportation ✩ , 2008 .

[11]  N. Cloutier.  Metropolitan Income Inequality During the 1980s: The Impact of Urban Development, Industrial Mix, and Family Structure , 1997 .

[12]  Lawrence F. Katz,et al.  The Company You Keep: The Effects of Family and Neighborhood on Disadvantaged Youths , 1991 .

[13]  Susan E. Mayer.  How the Growth in Income Inequality Increased Economic Segregation , 2001 .

[14]  W. Frey.  Melting Pot Suburbs: A Census 2000 Study of Suburban Diversity , 2001 .

[15]  Claude S. Fischer,et al.  Appendices to : “ Distinguishing the Geographic Levels and Social Dimensions of U . S . Metropolitan Segregation , 1960-2000 , 2004 .

[16]  Edward L. Glaeser,et al.  The Rise and Decline of the American Ghetto , 1997, Journal of Political Economy.

[17]  Sean F. Reardon,et al.  2. Measures of Multigroup Segregation , 2002 .

[18]  Mary J. Fischer.  The Relative Importance of Income and Race in Determining Residential Outcomes in U.S. Urban Areas, 1970-2000 , 2003 .

[19]  W. Wilson.  The truly disadvantaged : the inner city, the underclass, and public policy , 1988 .

[20]  C. Hoxby,et al.  Peer Effects in the Classroom: Learning from Gender and Race Variation , 2000 .

[21]  W. Gale,et al.  Brookings-Wharton papers on urban affairs , 2000 .

[22]  E. Glaeser,et al.  Are Ghettos Good or Bad? , 1995 .

[23]  Rima Wilkes,et al.  Does Socioeconomic Status Matter? Race, Class, and Residential Segregation , 2006 .

[24]  Charles M. Tiebout.  A Pure Theory of Local Expenditures , 1956, Journal of Political Economy.

[25]  Chad R. Farrell.  Bifurcation, Fragmentation or Integration? The Racial and Geographical Structure of US Metropolitan Segregation, 1990—2000 , 2008 .