Abstract
Both sorting on public goods and tastes for segregation contribute to the persistence of segregation in America. Incorporating Schelling’s (1969, 1971) concept of “neighborhood tipping” into a two-stage equilibrium sorting model, in which both neighborhood demographic composition and public goods (e.g., environmental quality) affect households’ residential location choice, this study investigates how preferences for neighborhood demographic composition could obscure the role of exogenous public goods on segregation. The results reveal that non-white households face higher level of exposure to air pollution, suggesting the presence of environmental injustice in Franklin County, OH. Using a counterfactual scenario of switching off heterogeneous taste for environmental quality, this study identifies that sorting on Toxic Release Inventory (TRI) emissions drives little correlations between emissions and demographics. However, when taste parameters of the interactions between neighborhood demographic composition and household race are eliminated, segregation (as measured by over-exposure to households of the same race) of black and white households decreases by 7.63% and 16.36%, respectively, and own-race neighbor preferences contribute to segregation differently according to household income. These results may help explain some recent puzzles in the relationship between environmental quality and demographics.
Highlights
Racial inequality and residential segregation, which play an important role in social sustainability, remain a significant social concern in the United States
Using the dataset created above, this study explores the correlation between Toxic Release Inventory (TRI) toxic emissions and racial segregation, and how tastes for endogenous demographics blur the role of exogenous public goods on segregation
To test whether effects of heterogeneous tastes for TRI emissions and demographic composition on racial segregation vary according to household income level, Table 5 reports the own-race over-exposure rate based on income quantiles
Summary
Racial inequality and residential segregation, which play an important role in social sustainability, remain a significant social concern in the United States. Segregation leads to vastly unequal neighborhoods, with minority households (especially African American) living in socioeconomically-and environmentally-disadvantaged neighborhoods Addressing this important topic, researchers have investigated the social mechanisms driving segregation. Schelling-type social interaction models follow Schelling’s [6,7] “spatial proximity model”, which specified a spatial setup in which households care about the ethnic or social composition of their own local neighborhood [8] From this perspective, economists examined the role of preferences for neighborhood racial composition (tastes for segregation/integration), and showed that the dynamics of neighborhood “tipping” can force segregated outcomes—wherein white households flee neighborhoods once they became majority minorities [9,10]
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