What Explains Neighborhood Sorting by Income and Race?

41 Pages Posted: 28 Jun 2018 Last revised: 10 Oct 2019

See all articles by Dionissi Aliprantis

Dionissi Aliprantis

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Daniel Carroll

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Eric R. Young

University of Virginia

Date Written: October 8, 2019

Abstract

Why do high-income black households live in neighborhoods with characteristics similar to those of low-income white households? We find that neighborhood sorting by income and race cannot be explained by financial constraints: High-income, high-wealth black households live in similar-quality neighborhoods as low-income, low-wealth white households. We provide evidence that black households sort across neighborhoods according to some non-pecuniary factor(s) correlated with the racial composition of neighborhoods. Black households sorting into black neighborhoods can explain the racial gap in neighborhood quality at all income levels. The supply of high-quality black neighborhoods drives the neighborhood quality of black households.

Keywords: Neighborhood, Income, Wealth, Race

JEL Classification: H72, J15, J18, R11, R21

Suggested Citation

Aliprantis, Dionissi and Carroll, Daniel and Young, Eric R., What Explains Neighborhood Sorting by Income and Race? (October 8, 2019). FRB of Cleveland Working Paper No. 18-08R, Available at SSRN: https://ssrn.com/abstract=3195529 or http://dx.doi.org/10.2139/ssrn.3195529

Dionissi Aliprantis (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Daniel Carroll

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Eric R. Young

University of Virginia ( email )

1400 University Ave
Charlottesville, VA 22903
United States

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