Working Paper: NBER ID: w25805
Authors: Prottoy A. Akbar; Sijie Li; Allison Shertzer; Randall P. Walsh
Abstract: Housing is the most important asset for the vast majority of American households and a key driver of racial disparities in wealth. This paper studies how residential segregation by race eroded black wealth in prewar urban areas. Using a novel sample of matched addresses from prewar American cities, we find that over a single decade rental prices soared by roughly 50 percent on city blocks that transitioned from all white to majority black. Meanwhile, pioneering black families paid a 28 percent premium to buy a home on a majority white block. These homes then lost 10 percent of their original value as the block became majority black. These findings strongly suggest that segregated housing markets cost black families much of the gains associated with migrating to the North.
Keywords: Racial Segregation; Housing Markets; Black Wealth
JEL Codes: J15; N12; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| racial transition (J79) | rental prices (R31) |
| racial transition (J79) | property values (R33) |
| pioneering black families (N91) | premium paid for homes on majority-white blocks (R21) |
| rental prices (R31) | economic burden on black families (J12) |
| racial transition (J79) | divergence in housing market dynamics (R31) |