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Title: Metropolitan Growth, Inequality, and Neighborhood Segregation by Income

Citation Type: Book, Section

Publication Year: 2006

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Abstract: This paper considers the relationship between metropolitan area growth and residential segregation by income across neighborhoods. Theory suggests that a number of factors are likely to affect the demand for income segregation. For example, as income inequality in a metropolitan area rises, the richest households are willing to pay more to live near other rich households, holding other factors constant. The degree to which this demand translates into observed segregation depends in part on how easily the housing market can respond to changing preferences. In rapidly growing metropolitan areas, new housing developments are created which reflect the current demand for segregation by income. In stagnating cities, however, the existing housing stock reflects the demand for economic segregation in a previous era. The empirical work supports the predictions of the model: (1) rising inequality (particularly at the top of the distribution) has a bigger effect on income segregation in more rapidly growing cities, and (2) rising income segregation is associated with the rapid creation of new housing stock even in metropolitan areas with stagnant population growth. The results suggest that policies targeted at managing metropolitan area growth are likely to have important long-run consequences for residential segregation by income.

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Authors: Watson, Tara

Editors: Eduardo Engel, Francisco Ferreira Roberto Rigobon

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Volume Title: Brookings-Wharton Papers on Urban Affairs

Publisher: Brookings Institution Press

Publisher Location: Washington, DC

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Data Collections: IPUMS USA

Topics: Housing and Segregation

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