Residential segregation by race grew sharply during the early twentieth century as black migrants from the South arrived in northern cities. Using newly assembled neighborhood-level data, we provide the first systematic evidence on the impact of prewar population dynamics within cities on the emergence of the American ghetto. Leveraging exogenous changes in neighborhood racial composition, we show that white flight in response to black arrivals was quantitatively large and accelerated between 1900 and 1930. A key implication of our findings is that segregation could have arisen solely from the flight behavior of whites.

We develop a transferable utility model of the household in which the marriage market is characterized by (negative or positive) assortative matching, and spousal allocations are determined by premarital investments. We demonstrate that all sharing rules along the assortative order support efficient outcomes both in terms of premarital investments and intra-household allocations. The efficiency of premarital choices and household allocations then enables us to show that, for each couple, the marriage market generates a unique and maritally sustainable sharing rule that is a function of the distribution of premarital endowments and the sex ratios in the market. According to our results, transfers among spouses occur on two margins: premarital investments and intra-marital spousal allocations. Asymmetries in the sex ratios in the marriage markets produce gender differences in premarital investments and consumption that are larger for individuals with small premarital endowments than those with larger endowments. A corollary of these findings is that, when men are in short supply in the marriage markets, women can invest more than men even when the returns to investment are lower or the costs are higher for women.

Charles Tiebout's suggestion that people “vote with their feet” for communities with optimal bundles of taxes and public goods has played a central role in local public finance for over 50 years. Using a locational equilibrium model, we derive formal tests of his premise. The model predicts increased population density in neighborhoods experiencing exogenous improvements in public goods and, for large improvements, increased relative mean incomes. We test these hypotheses in the context of changing air quality. Our results provide strong empirical support for the notion that households “vote with their feet” for environmental quality. (JEL H41, H73, Q53, R23)

Abstract This paper studies how the expansion of segregated neighborhoods eroded black wealth in prewar American cities. Using a novel sample of matched addresses, we find that over a single decade rental prices soared by roughly 50% on city blocks that transitioned from all white to majority black. Meanwhile, pioneering black families paid a 28% premium to buy a home on a majority white block, after which their homes lost 10% of their value. These findings strongly suggest that segregated housing markets cost black families much of the gains associated with moving north during the Great Migration.