Immigration and segregation.

• Author: Wachter, Susan M.
• Position: Essay

What impact does immigration have on patterns of neighborhood segregation? Immigrants prefer immigrant-dense neighborhoods, due to the proximity they afford to people of the same national, ethnic, or linguistic group (Borjas 1992). This clustering does not imply higher house prices or rents in such neighborhoods, however, since native-born residents tend to respond by moving to less expensive neighborhoods themselves.

But are those natives neutral about where they live? Or do they prefer to live in mostly native neighborhoods? In the latter case, the resulting outcome may be native-born citizens' flight and a degree of segregation that does not reflect immigrant choice. As in the major migration of African-Americans from the South to the North in the first half of the 20th century, the preferences of previous settlers are central to determining neighborhood segregation outcomes and social capital consequences--including those arising from labor market networks, native language proficiency, and educational achievement (Jargowsky 2016, Kneebone 2016).

Immigration and the Neighborhood Revisited

In our American Economic Review article tided "Immigration and Neighborhood," Albert Saiz and I (Saiz and Wachter 2011) provide evidence on the segregation of immigrants and native-born populations, and the consequent neighborhood sorting by income and ethnicity. As we wrote, housing markets reveal natives' preferences and likely segregation outcomes:

Following conventional racial segregation models ... we are interested in knowing whether changes in a neighborhood's immigrant share are related to local changes in home values. In a theoretical model with perfect mobility, immigration need not have any impact on the relative housing values of the neighborhoods where immigrants concentrate. However, if immigrant enclaves are perceived as less desirable places to live by natives, then we should expect a relative negative association between immigration density and housing values. A negative association (controlling for other location and housing quality attributes) provides an unequivocal sign of native preferences for segregation. Intuitively, a non-arbitrage condition ensures that prices cannot be lower in a location unless there is a perceived negative compensating differential: otherwise opportunistic natives move in until the price gap is bridged [Saiz and Wachter 2011: 173].

We establish an empirical methodology to test for immigrant concentration and native and white flight. We find that neighborhoods with a growing immigrant presence do experience an exit of native-born residents and lower housing values after adjusting for changes in housing quality and accounting for other neighborhood characteristics. This dynamic, of the native born exiting neighborhoods with increased numbers of immigrant residents, is consistent with the results of a historical study by Shertzer and Walsh (2016), who find that white departure in response to the arrival of...