Resource title

The effect of credit standards on urban and school segregation

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image for OpenScout resource :: The effect of credit standards on urban and school segregation

Resource description

This paper shows that the mortgage credit boom has significantly affected urban and school racial segregation from 1995 to 2007. We develop a model of urban segregation with credit constraints that shows that easier credit can either increase or decrease segregation, depending on the race of the marginal consumer who benefits from the expansion of credit. We then use the annual racial demographics of each of the approximately 90,000 public schools in the United States from 1995 to 2007, matched to a national comprehensive dataset of mortgage originations, linked to the neighbourhood of the house, to show that higher leverage increases the segregation of African American and Hispanic students. Both segregation across schools and across school districts are higher when the leverage is higher. Higher leverage allows households to avoid interracial contact.

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Resource language

en

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application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2011/2011-31.pdf

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Copyright INSEAD. All rights reserved