Racial Segregation in Housing Markets and the Erosion of Black Wealth

60 Pages Posted: 7 May 2019

See all articles by Prottoy Akbar

Prottoy Akbar

University of Pittsburgh

Sijie Li

University of Pittsburgh

Allison Shertzer

University of Pittsburgh - Department of Economics

Randall Walsh

University of Pittsburgh - Department of Economics

Date Written: May 2019

Abstract

Housing is the most important asset for the vast majority of American households and a key driver of racial disparities in wealth. This paper studies how residential segregation by race eroded black wealth in prewar urban areas. Using a novel sample of matched addresses from prewar American cities, we find that over a single decade rental prices soared by roughly 50 percent on city blocks that transitioned from all white to majority black. Meanwhile, pioneering black families paid a 28 percent premium to buy a home on a majority white block. These homes then lost 10 percent of their original value as the block became majority black. These findings strongly suggest that segregated housing markets cost black families much of the gains associated with migrating to the North.

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Suggested Citation

Akbar, Prottoy and Li, Sijie and Shertzer, Allison and Walsh, Randall, Racial Segregation in Housing Markets and the Erosion of Black Wealth (May 2019). NBER Working Paper No. w25805. Available at SSRN: https://ssrn.com/abstract=3383304

Prottoy Akbar (Contact Author)

University of Pittsburgh

135 N Bellefield Ave
Pittsburgh, PA 15260
United States

Sijie Li

University of Pittsburgh

Allison Shertzer

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh, PA 15260
United States

Randall Walsh

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh, PA 15260
United States

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