The Effect of School Desegregation on Housing Prices

Abstract

SINCE 1954 nearly all vestiges of legal segregation of public schools in the South have been eliminated. But, at the same time, the suburbanization of households in Southern cities has contributed to the de facto resegregation of some schools. Just as the Tiebout hypothesis (1956) suggests that households locate according to their preferences regarding local public goods, there is some evidence to indicate that preferences for segregated schools may have contributed to this resegregation. Glantz and Delaney (1973) found that, by one measure, metropolitan residential segregation increased more during the 1960's in Southern metropolitan areas -where city schools were substantially desegregated than in the Northern metropolitan areas studied. And for some organizations, a primary reason for supporting recently ordered metropolitan desegregation plans which would effectively combine city and suburban school systems is the belief that desegregation of city schools alone merely contributed to white flight from the city.' But, because there are other factors which may also cause suburbanization of whites, such as employment decentralization and the growth of Negro ghettos, it is not clear whether school desegregation has had an independent effect on the demand for housing by households. This paper presents an analysis of housing prices to determine whether desegregation has an independent effect on the price paid by whites for housing. Since the supply of housing is relatively inelastic in the short run, an effect of this kind would support the hypothesis that desegregation affects households' demand for housing. While shifts in demand will result primarily in price effects in the short run, quantity changes and locational rearrangement will be most important in the long run. In order to determine if shifts in demand have accompanied desegregation, this paper will examine such price effects. The metropolitan area studied is Atlanta, Georgia, a Southern city which experienced school desegregation and apparent white flight during the 1960's. In 1960, a year before desegregation was begun, 37.2 % of the students in the city school system were Negro. By 1970 this figure was 67.1%. During the decade the proportion of Negro families in the city rose from 34.0% to 47.7%o. These changes reflect a number of different locational trends, one of the most important of which was a rapid growth in the city's Negro population. In order to assess the independent effect of school desegregation on housing demand, it is above all necessary to separate the effect of school racial composition from that of neighborhood racial composition, as well as other supply and demand factors affecting housing prices. The analysis presented in this paper uses data on housing prices and characteristics drawn from 1960 and 1970 census tract reports for Atlanta. The comparatively rapid end to de jure segregation in that city during the decade of the 1960's provides a unique opportunity to separate the effects of neighborhood and school integration. The empirical analysis supports the hypothesis that school desegregation does have a significant effect on housing prices, independent of neighborhood racial change. Section I discusses the use of housing prices in determining the effect of public service characteristics on housing demand. Sections II and III describe the data and the empirical findings. Section IV summarizes the analysis. Received for publication December 3, 1973. Revision acaccepted for publication July 30, 1974. * I am grateful to Professors Martin Feldstein, John Kain, Richard Freeman, and Gregory Ingram, members of the public finance and urban economics seminars at Harvard, and referees for this Review for comments on earlier drafts of this paper. Financial support was provided by the Ford Foundation. 1 See, for example, the testimony of William L. Taylor, Director of the Center for National Policy Review in hearings before the Senate Select Committee on Equal Educational Opportunity, November 30, 1971, p. 10475 or Junie Brown, City School Case: No End in Sight, Atlanta Journal-Constitution, December 31, 1972, pp. IA, 6A.