What Drives Racial Segregation? New Evidence Using Census Microdata

Abstract:     
This paper sheds new light on the forces that drive residential segregation on the basis of race, assessing the extent to which across-race differences in other household characteristics can
explain a significant portion of observed racial segregation.
The central contribution of the analysis is to provide a
transparent new measurement framework for understanding
segregation patterns. This framework allows researchers to
characterize patterns of segregation, to decompose them in
meaningful ways, and to carry out partial equilibrium
counterfactuals that illuminate the contributions of a variety
of non-race characteristics in driving segregation. We
illustrate our approach using restricted micro-Census data
from the San Francisco Bay Area that provide a rich joint
distribution of household and neighborhood characteristics not
previously available to the research community. In contrast to
findings in the prior literature, our analysis indicates that
individual household characteristics can explain a considerable fraction of segregation by race, explaining almost 95% of
segregation for Hispanic, over 50% for Asian, and 30% for
White and Black households.

Keywords: Residential Segregation, Racial Segregation, Sorting, Housing Markets

JEL Classifications: H0, J7, R0, R2

Working Paper Series