Understanding Racial Segregation:What is Known about the Effect of Housing Discrimination

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Stephen L Ross's presentation for

the Penn IUR and Federal Reserve Conference, “Reinventing Older Communities: How Does Place Matter?”

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Understanding Racial Segregation:What is Known about the Effect of Housing Discrimination

  1. 1. Understanding Racial Segregation: What is Known about the Effect of Housing Discrimination Stephen L Ross University of Connecticut
  2. 2. Empirical Facts on Racial Segregation <ul><li>High levels of racial segregation cannot be explained by economic factors </li></ul><ul><li>Moderate declines in racial segregation, but mostly due to increased exposure to Hispanics </li></ul><ul><li>Much lower levels of segregation among Hispanics mostly explained by economic factors especially among later generations </li></ul>
  3. 3. Housing Discrimination <ul><li>Historically, rigid neighborhood barriers, high housing prices and density, and blockbusting </li></ul><ul><li>Paired testing documents high levels of discrimination in 70’ & 80’s, but shift of black Homeowners in 80’s away from central cities </li></ul><ul><li>HDS 2000: Declines in discrimination against blacks and Hispanics in sales, but segregation did not fall faster in areas with declines </li></ul>
  4. 4. Segregation and Housing Discrimination <ul><li>Restricted neighborhood opportunities should increase housing prices, but little evidence of any premia from the 1970’s to Present </li></ul><ul><li>Housing Discrimination did not prevent suburbanization in 80’s and 90’s and recent declines in discrimination have not lead to declines in segregation </li></ul>
  5. 5. Countervailing Views <ul><li>Rental market discrimination can be hidden from testers, but white suburbs mostly owner-occupied housing stock </li></ul><ul><li>Evidence of neighborhood steering based on Race, but steering infrequent on visiting units and commentary aimed at whites </li></ul>
  6. 6. Persistent Segregation and Stereotypes <ul><li>Negative stereotypes predict willingness to live with blacks, decisions to move into integrated neighborhoods, and housing prices </li></ul><ul><li>Past discrimination caused past segregation creating perceptions that promote segregation today </li></ul><ul><li>Real estate agents reflect and are part of that reality as opposed to creating it </li></ul>
  7. 7. Stereotypes and Today’s Papers <ul><li>Are Mixed Neighborhoods Unstable </li></ul><ul><ul><li>Stable integrated equilibria possible below tipping points that are increasing over time </li></ul></ul><ul><ul><li>Could be capturing threshold associated with signal of bad neighborhood </li></ul></ul><ul><li>Preferences for Hispanic Neighborhoods </li></ul><ul><ul><li>Evidence of self-segregation for both whites and Hispanics (price impact depends on composition) </li></ul></ul><ul><ul><li>Could part of this finding be ethnic information differences based on neighborhood composition </li></ul></ul>
  8. 8. Conclusions <ul><li>Past, not current, housing discrimination key to persistent segregation due to stereotypes </li></ul><ul><li>Stable integrated neighborhoods below critical tipping points – This may also be true for Hispanics </li></ul><ul><li>Changes in attitudes and greater information access consistent with higher tipping points </li></ul><ul><li>Information asymmetry important for understanding and possibly mitigating patterns of segregation </li></ul>

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