IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v178y2020icp801-819.html
   My bibliography  Save this article

Residential segregation: The role of inequality and housing subsidies

Author

Listed:
  • Harting, Philipp
  • Radi, Davide

Abstract

Residential segregation is a key public policy issue that is driven by economic factors on the one side, and individual attitudes towards ethnic diversity on the other side. We assume a modeling framework that consists of a population of two ethnic groups, a rental market for each neighborhood, and household’s utility which depends on consumption and housing. Accounting for income disparities and heterogeneous preferences for living in ethnically diverse neighborhoods, we examine the residential segregation patterns that occur when households make their neighborhood choice by taking economic and diversity related aspects into account. The investigation reveals that ethnic income disparities and heterogeneous preferences are antagonistic forces such that a certain level of income stratification is the price for residential integration. In light of these findings, we discuss to which extent and under which conditions housing subsidy policies can favor residential integration.

Suggested Citation

  • Harting, Philipp & Radi, Davide, 2020. "Residential segregation: The role of inequality and housing subsidies," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 801-819.
    • Handle: RePEc:eee:jeborg:v:178:y:2020:i:c:p:801-819
    DOI: 10.1016/j.jebo.2020.08.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268120302699
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2020.08.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nechyba, Thomas, 2003. "School finance, spatial income segregation, and the nature of communities," Journal of Urban Economics, Elsevier, vol. 54(1), pages 61-88, July.
    2. Morris A. Davis, 2010. "housing and the business cycle," The New Palgrave Dictionary of Economics,, Palgrave Macmillan.
    3. Bayer, Patrick & Fang, Hanming & McMillan, Robert, 2014. "Separate when equal? Racial inequality and residential segregation," Journal of Urban Economics, Elsevier, vol. 82(C), pages 32-48.
    4. Zhang, Junfu, 2004. "Residential segregation in an all-integrationist world," Journal of Economic Behavior & Organization, Elsevier, vol. 54(4), pages 533-550, August.
    5. Epple, Dennis & Platt, Glenn J., 1998. "Equilibrium and Local Redistribution in an Urban Economy when Households Differ in both Preferences and Incomes," Journal of Urban Economics, Elsevier, vol. 43(1), pages 23-51, January.
    6. Fagiolo, Giorgio & Valente, Marco & Vriend, Nicolaas J., 2007. "Segregation in networks," Journal of Economic Behavior & Organization, Elsevier, vol. 64(3-4), pages 316-336.
    7. Morris A. Davis & Francois Ortalo-Magne, 2011. "Household Expenditures, Wages, Rents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 248-261, April.
    8. Helms, Andrew C., 2003. "Understanding gentrification: an empirical analysis of the determinants of urban housing renovation," Journal of Urban Economics, Elsevier, vol. 54(3), pages 474-498, November.
    9. Rajiv Sethi & Rohini Somanathan, 2004. "Inequality and Segregation," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1296-1321, December.
    10. Matteo Iacoviello, 2005. "House Prices, Borrowing Constraints, and Monetary Policy in the Business Cycle," American Economic Review, American Economic Association, vol. 95(3), pages 739-764, June.
    11. W. Clark, 1991. "Residential preferences and neighborhood racial segregation: A test of the schelling segregation model," Demography, Springer;Population Association of America (PAA), vol. 28(1), pages 1-19, February.
    12. Carpenter, Jeffrey P, 2002. "Evolutionary Models of Bargaining: Comparing Agent-Based Computational and Analytical Approaches to Understanding Convention Evolution," Computational Economics, Springer;Society for Computational Economics, vol. 19(1), pages 25-49, February.
    13. Pancs, Romans & Vriend, Nicolaas J., 2007. "Schelling's spatial proximity model of segregation revisited," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 1-24, February.
    14. Junfu Zhang, 2011. "Tipping And Residential Segregation: A Unified Schelling Model," Journal of Regional Science, Wiley Blackwell, vol. 51(1), pages 167-193, February.
    15. Nobuhiro Kiyotaki & Alexander Michaelides & Kalin Nikolov, 2011. "Winners and Losers in Housing Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 255-296, March.
    16. Tara Watson, 2009. "Inequality And The Measurement Of Residential Segregation By Income In American Neighborhoods," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 820-844, September.
    17. Giorgio Fagiolo & Marco Valente & Nicolaas J. Vriend, 2009. "A Dynamic Model of Segregation in Small-World Networks," Lecture Notes in Economics and Mathematical Systems, in: Ahmad K. Naimzada & Silvana Stefani & Anna Torriero (ed.), Networks, Topology and Dynamics, pages 111-126, Springer.
    18. Simon N. Wood, 2011. "Fast stable restricted maximum likelihood and marginal likelihood estimation of semiparametric generalized linear models," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 73(1), pages 3-36, January.
    19. Borjas, George J., 1998. "To Ghetto or Not to Ghetto: Ethnicity and Residential Segregation," Journal of Urban Economics, Elsevier, vol. 44(2), pages 228-253, September.
    20. Pangallo, Marco & Nadal, Jean-Pierre & Vignes, Annick, 2019. "Residential income segregation: A behavioral model of the housing market," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 15-35.
    21. Adi Brender, 2005. "Ethnic Segregation and the Quality of Local Government in the Minorities Localities: Local Tax Collection in the Israeli-Arab Municipalities as a Case Study," Bank of Israel Working Papers 2005.01, Bank of Israel.
    22. Dawid, Herbert, 2007. "Evolutionary game dynamics and the analysis of agent-based imitation models: The long run, the medium run and the importance of global analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 31(6), pages 2108-2133, June.
    23. Young, H. Peyton, 2006. "Social Dynamics: TheorY AND Applications," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 22, pages 1081-1108, Elsevier.
    24. Bischi, G. -I. & Dawid, H. & Kopel, M., 2003. "Spillover effects and the evolution of firm clusters," Journal of Economic Behavior & Organization, Elsevier, vol. 50(1), pages 47-75, January.
    25. Kern, Clifford R., 1981. "Racial prejudice and residential segregation: The Yinger model revisited," Journal of Urban Economics, Elsevier, vol. 10(2), pages 164-172, September.
    26. Anas, Alex, 2002. "Prejudice, exclusion, and compensating transfers: the economics of ethnic segregation," Journal of Urban Economics, Elsevier, vol. 52(3), pages 409-432, November.
    27. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-493, May.
    28. Giorgio Fagiolo & Marco Valente & Nicolaas J. Vriend, 2009. "A Dynamic Model of Segregation in Small-World Networks," Lecture Notes in Economics and Mathematical Systems, in: Ahmad K. Naimzada & Silvana Stefani & Anna Torriero (ed.), Networks, Topology and Dynamics, pages 111-126, Springer.
    29. Esther Havekes & Michael Bader & Maria Krysan, 2016. "Realizing Racial and Ethnic Neighborhood Preferences? Exploring the Mismatches Between What People Want, Where They Search, and Where They Live," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 35(1), pages 101-126, February.
    30. Yinger, John, 1976. "Racial prejudice and racial residential segregation in an urban model," Journal of Urban Economics, Elsevier, vol. 3(4), pages 383-396, October.
    31. Laura Gardini & Davide Radi, 2018. "A piecewise smooth model of evolutionary game for residential mobility and segregation," Working Papers 1802, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2018.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Schulz, Jan & Mayerhoffer, Daniel M., 2021. "A network approach to consumption," BERG Working Paper Series 173, Bamberg University, Bamberg Economic Research Group.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sheng Li & Kuo-Liang Chang & Lanlan Wang, 2020. "Racial residential segregation in multiple neighborhood markets: a dynamic sorting study," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 15(2), pages 363-383, April.
    2. Roy Cerqueti & Luca De Benedictis & Valerio Leone Sciabolazza, 2022. "Segregation with social linkages: Evaluating Schelling’s model with networked individuals," Metroeconomica, Wiley Blackwell, vol. 73(2), pages 384-440, May.
    3. Laura Gardini & Davide Radi, 2018. "A piecewise smooth model of evolutionary game for residential mobility and segregation," Working Papers 1802, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2018.
    4. Zhiwei Cui & Yan-An Hwang, 2017. "House exchange and residential segregation in networks," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(1), pages 125-147, March.
    5. Grauwin, Sébastian & Goffette-Nagot, Florence & Jensen, Pablo, 2012. "Dynamic models of residential segregation: An analytical solution," Journal of Public Economics, Elsevier, vol. 96(1), pages 124-141.
    6. Isabel Melguizo, 2023. "Group representation concerns and network formation," Bulletin of Economic Research, Wiley Blackwell, vol. 75(1), pages 151-179, January.
    7. John Lynham & Philip R. Neary, 2024. "Tiebout sorting in online communities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 73(3), pages 1149-1174, October.
    8. Pancs, Romans & Vriend, Nicolaas J., 2007. "Schelling's spatial proximity model of segregation revisited," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 1-24, February.
    9. Malone, Thom, 2020. "There goes the neighborhood does tipping exist amongst income groups?," Journal of Housing Economics, Elsevier, vol. 48(C).
    10. Florence Goffette-Nagot & Pablo Jensen & Sebastian Grauwin, 2009. "Dynamic models of residential segregation: Brief review, analytical resolution and study of the introduction of coordination," Post-Print halshs-00404400, HAL.
    11. Junfu Zhang, 2011. "Tipping And Residential Segregation: A Unified Schelling Model," Journal of Regional Science, Wiley Blackwell, vol. 51(1), pages 167-193, February.
    12. Gandica, Yerali & Gargiulo, Floriana & Carletti, Timoteo, 2016. "Can topology reshape segregation patterns?," Chaos, Solitons & Fractals, Elsevier, vol. 90(C), pages 46-54.
    13. John Lynham & Philip R. Neary, 2021. "Tiebout sorting in online communities," Papers 2110.05608, arXiv.org, revised May 2024.
    14. Grossmann, Volker & Larin, Benjamin & Löfflad, Hans Torben & Steger, Thomas, 2021. "Distributional consequences of surging housing rents," Journal of Economic Theory, Elsevier, vol. 196(C).
    15. Rajiv Sethi & Rohini Somanathan, 2004. "Inequality and Segregation," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1296-1321, December.
    16. Guifeng Su & Yi Zhang, 2023. "Significant suppression of segregation in Schelling’s metapopulation model with star-type underlying topology," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 96(7), pages 1-6, July.
    17. Pascal Mossay & Pierre Picard, 2019. "Spatial segregation and urban structure," Journal of Regional Science, Wiley Blackwell, vol. 59(3), pages 480-507, June.
    18. Piazzesi, M. & Schneider, M., 2016. "Housing and Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1547-1640, Elsevier.
    19. Florent Dubois & Christophe Muller, 2017. "Segregation and the Perception of the Minority," Working Papers halshs-01520308, HAL.
    20. Trevor Kollmann & Simone Marsiglio & Sandy Suardi & Marco Tolotti, 2021. "Social interactions, residential segregation and the dynamics of tipping," Journal of Evolutionary Economics, Springer, vol. 31(4), pages 1355-1388, September.

    More about this item

    Keywords

    Residential segregation; Ethnic income disparities; Housing subsidies; Evolutionary dynamics;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:178:y:2020:i:c:p:801-819. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.