Consumption Segregation
This paper introduces consumption segregation as a new dimension of residential segregation, examines its patterns and determinants, and discusses its implications. Using novel longitudinal and highly granular data, we measure consumption segregation in the United States and document that, while it remains high, it has declined over the past 15 years and exhibits substantial regional variation. We find a strong correlation between consumption segregation and income segregation. We interpret it through the lens of a standard consumption model and argue that the correlation arises primarily due to incomplete markets that limit consumption insurance across income groups.
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