The Rise and Decline of the American Ghetto

...today's segregation is characterized by decentralized forces; whites pay more than blacks to live in predominantly white areas.

Racial segregation in the United States remains at a very high level. On average, 60 percent of blacks would have to move in order for blacks and whites to be equally distributed in American cities. Why is segregation so high? Will it continue to remain high, or will it fall in the future? These are some of the questions that David Cutler, Edward Glaeser, and Jacob Vigdor explore in The Rise and Decline of the American Ghetto (NBER Working Paper No. 5881).

Cutler, Glaeser, and Vigdor examine segregation in American cities over the century from 1890 to 1990. From 1890 to 1940, they learn, blacks migrated to urban areas, creating ghettos in the process. Between 1940 and 1970, black ghettos expanded and cemented themselves in economic life. Since 1970, though, urban segregation has declined, especially for more educated blacks.

The authors suggest and evaluate three different explanations for urban segregation. First, ghettos may be a way for new migrants to adjust to a different cultural environment. Since 1970, for example, black migrants from the South are 10 percent more likely to belong to an all-black church than native Northern blacks, and are 24 percent more likely to prefer a segregated neighborhood.

Second, "collective action racism," such as restrictive covenants, racial zoning, policy instruments, and threats of violence which were widespread before 1960, may have played a role in creating segregated urban neighborhoods. Indeed, the authors find a much higher use of restrictive real estate covenants in cities that are more segregated.

Third, there may be "decentralized racism," in which whites simply pay more to live in areas with other whites, a "privilege" that is worth more to whites than to blacks. The data seem to support this explanation as a contributing factor for the persistent segregation we experience today, decades after equal housing laws were enacted.

Using detailed data from Cleveland, Atlanta, and Sacramento, and national data on segregation across cities, the authors find that the causes of segregation in American cities have changed over time. In the early part of the century whites took collective action to exclude blacks from neighborhoods. In contrast, today's segregation is characterized by decentralized forces; whites pay more than blacks to live in predominantly white areas. As the first type of racism decreases, urban integration does increase, although at modest rates and predominately because small numbers of blacks now live in what were formerly all white areas.

The authors also find that as urban population or density increases, so does segregation. In other words, larger cities are more segregated than smaller ones, a fact that has been true throughout the past century. Further, despite gains in integrated urban housing, "there are more completely black areas in our cities than there have ever been in the past."

This has significant economic implications, for both blacks and whites. For example, on average blacks pay less than whites for urban housing. But, in more segregated cities, blacks pay relatively more for rental housing than do whites in the same areas.