TY - JOUR AU - Bayer,Patrick AU - McMillan,Robert AU - Rueben,Kim TI - Residential Segregation in General Equilibrium JF - National Bureau of Economic Research Working Paper Series VL - No. 11095 PY - 2005 Y2 - January 2005 UR - http://www.nber.org/papers/w11095 L1 - http://www.nber.org/papers/w11095.pdf N1 - Author contact info: Patrick Bayer Department of Economics Duke University 213 Social Sciences Durham, NC 27708 Tel: 919/660-1832 E-Mail: patrick.bayer@duke.edu Robert McMillan University of Toronto Department of Economics 150 St. George Street Toronto, ON M5S 3G7 CANADA Tel: 416/978-4190 Fax: 416/978-6713 E-Mail: mcmillan@chass.utoronto.ca Kim Rueben Urban Institute 2100 M Street NW Washington DC 20037 Tel: 202-261-5662 Fax: Senior Research Associate E-Mail: krueben@ui.urban.org AB - Black households in the United States with high levels of income and education (SES) typically face a stark tradeoff when deciding where to live. They can choose neighborhoods with high levels of public goods or a high proportion of blacks, but very few neighborhoods combine both, a fact we document clearly. In the face of this constraint, we conjecture that racial sorting may dramatically lower the consumption of local public goods by high-SES blacks. To shed light on this, we estimate a model of residential sorting using unusually detailed restricted Census microdata, then use the estimated preferences to simulate a counterfactual world in which racial factors play no role in household residential location decisions. Results from this exercise provide the first evidence that sorting on the basis of race gives rise to significant reductions in the consumption of local public goods by black and high-SES black households in particular. These consumption effects lead to significant losses of welfare and are likely to have important intergenerational implications. ER -