Working Paper: NBER ID: w31133
Authors: Corina Boar; Elisa Giannone
Abstract: This paper introduces consumption segregation, a new margin of residential segregation, and examines its patterns, causes, and discusses its aggregate consequences. We use new longitudinal and highly granular data to measure consumption segregation in the United States and document that it is high but relatively stable over the past 15 years, with substantial regional variation. We find that income segregation plays a more prominent role than other forms of segregation in driving consumption segregation, mainly due to the inability to smooth shocks to income. We illustrate a new mechanism through which, in the presence of social comparisons, consumption segregation can exacerbate wealth inequality.
Keywords: Consumption Segregation; Income Segregation; Wealth Inequality; Social Comparisons
JEL Codes: E20; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Income Segregation (D31) | Consumption Segregation (D10) |
| Consumption Segregation (D10) | Wealth Inequality (D31) |
| Income Segregation (D31) | Wealth Inequality (D31) |
| Less Segregated Areas (R23) | Increased Incentive to Save Among Poorer Households (D14) |