Asymmetric Income Segregation

Abstract

Income segregation is found to be a common phenomenon, which imposes far-reaching implications on housing and social policies. However, the focus has long been on its extent rather than on its distribution. This study investigates the asymmetric relationship between household income and income segregation in Hong Kong, by studying the census data in 2001 and in 2006, compiled by the Hong Kong SAR Government. The result shows that segregation is more intense among high household income districts, which cannot be explained by the existing theories. We put forward a novel hypothesis, based on a one-sided self-reinforcing and spatial-diffusing model, which helps explain the underlying cause of asymmetric income segregation. The model is well supported by both a theoretical simulation and an empirical test.

Keywords: income segregation, household income, spatial autocorrelation, private housing market

JEL Classification: R12, R21