Interesting Paper on Residential Segregation

This looks interesting:

Separate When Equal? Racial Inequality and Residential Segregation

PATRICK J. BAYER
Yale University - Department of Economics; National Bureau of Economic Research (NBER)
HANMING FANG
Yale University - Department of Economics; National Bureau of Economic Research (NBER)
ROBERT MCMILLAN
University of Toronto - Department of Economics
--------------------------------------------------------------------------------
October 2005

Yale Economic Applications and Policy Discussion Paper No. 9


Abstract:
Standard intuition suggests that residential segregation in the United States will decline when racial inequality narrows. In this paper, we hypothesize that the opposite will occur. We note that middle-class black neighborhoods are in short supply in many U.S. metropolitan areas, forcing highly educated blacks either to live in predominantly white high-socioeconomic status (SES) neighborhoods or in more black lower-SES neighborhoods. Increases in the proportion of highly educated blacks in a metropolitan area may then lead to the emergence of new middle-class black neighborhoods, causing increases in residential segregation. We formalize this mechanism using a simple model of residential choice that permits endogenous neighborhood formation. Our primary empirical analysis, based on across-MSA evidence from the 2000 Census, indicates that this mechanism does indeed operate: as the proportion of highly educated blacks in an MSA increases, so the segregation of blacks at all education levels increases. Time-series evidence provides additional support for the hypothesis, showing that an increase in black educational attainment in a metropolitan area between 1990-2000 significantly increases segregation. Our analysis has important implications for the evolution of both residential segregation and racial socioeconomic inequality, drawing attention to a negative feedback loop likely to inhibit reductions in segregation and racial inequality over time.