Neighborhood Choice and Segregation

1
Neighborhood Choice and Segregation

• Chapter 8

2
Local Public Goods

• Vote with feet.
• Local government provides an amount of local
  public goods preferred by the majority of
  residents.
• Local goods available to those nearby.
• Public goods nonexcludable and nonrivalrous.
• People with similar preference live together.

3
Externalities

• Learn from good kits.
• Learn job opportunities from neighbors.
• Butchers cannot help biochemists.
• Culture preferences and scale economy.
• Chinese restaurants and the China Town

4
A Simple Model

• Two neighborhoods each has 100 lots
• 100 rich household and 100 poor household
• Degrees of segregation
• Perfect integration 50 50
• Perfect segregation rich in one place poor in
  the other
• Partial segregation

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A Simple Model Perfect segregation
6
A Simple Model Perfect integration
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A Simple Model Partial integration
8
Racial Segregation

• Data Census 2000 Summary File 1
• Look at Boston, Chicago, Detroit, and L.A.
• Racial segregation across census tracts.
• Percentage of people who are white.

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Racial Segregation Boston
10
Racial Segregation Chicago
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Racial Segregation Detroit
12
Racial Segregation L.A.
13
A measure of segregation

• Take a city with N locations. Let bi and wi be
  the number of blacks and whites at location i.
  Let bTotal and wTotal be the total number of
  blacks and whites.
• Question There are two locations. One has 4
  blacks and 6 whites the other has 6 blacks and 4
  whites. Calculate the dissimilarity index. What
  share of the black population would need to
  change locations for the races to be evenly
  distributed?

14
Land rent pattern and segregation in a
monocentric city

• A city with the right wing only
• Two types of people, black and white, Hb and Hw
  are the numbers of each. Income is the same.
• Everyone needs one unit of land. For simplicity,
  assume whites prefer to live near whites but
  blacks are indifferent to the color of neighbors.
  
• Blacks
• Whites

Distance to the CBD
Percentage of neighbors who are white within
µ-k,µk where k defines neighborhood
The extent of bias by whites
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Land rent pattern and segregation in a
monocentric city

• An equilibrium is that blacks live in 0, Hb
  while whites live in Hb, HbHw
• Verify that everyone is indifferent between where
  to live
• Then

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Land rent pattern and segregation in a
monocentric city

• Bid rent curve has three pieces
• Neighbors are all whites at µ?Hbk, HbHw

Distance to the city edge
Rent at the city edge
Commuting cost per unit of distance
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Land rent pattern and segregation in a
monocentric city

• Black neighbors and white neighbors at µ?Hb,
  Hbk
• Note that if
• then the price rises as moving closer to the
  suburbs!

Disutility by living with blacks
18
Land rent pattern and segregation in a
monocentric city

• Neighbors are all black at µ?0, Hb
• Notice that land prices are lower in this
  segregated equilibrium

19
Land rent pattern and segregation in a
monocentric city

• Segregation equilibrium with whites close in and
  blacks in the suburb.

20
Integrated equilibrium

• There is an integrated equilibrium where y(µ) is
  the same everywhere.