Working Paper: NBER ID: w16057
Authors: H. Spencer Banzhaf; Randall P. Walsh
Abstract: Segregation has been a recurring social concern throughout human history. While much progress has been made to our understanding of the mechanisms driving segregation, work to date has ignored the role played by location-specific amenities. Nonetheless, policy remedies for reducing group inequity often involve place-based investments in minority communities. In this paper, we introduce an exogenous location-specific public good into a model of group segregation. We characterize the equilibria of the model and derive the comparative statics of improvements to the local public goods. We show that the dynamics of neighborhood tipping depend on the levels of public goods. We also show that investments in low-public good communities can actually increase segregation.
Keywords: Segregation; Public Goods; Neighborhood Tipping; Demographic Sorting
JEL Codes: H4; J1; Q5; R2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Improvements in air pollution sites (Q53) | increased racial sorting (R23) |
| Public goods (H41) | demographic sorting (J11) |
| Public goods (H41) | segregation (Y40) |
| Investments in low-public good communities (H40) | increased segregation (R23) |