Language and Segregation: Evidence from Housing Markets in the United States

Residential segregation has been blamed for causing adverse social and economic effects, and contradicting to the ideology of a free and equal society. However, studies have documented that psychological and cultural benefits of such clustering. If households believe that it would provide greater support and better future opportunities, they may choose to live in a segregated community. We conduct a comprehensive analysis by estimating residential choices of minorities and identifying their willingness to pay for housing attributes and community characteristics. Recognizing that the language spoken at home contributes to the sense of ethnic commonness and belonging, we extend the study to include several minority groups (Hispanics, Chinese, Indians, and nonwhite English speakers), classified by spoken languages. We find that there is great heterogeneity in preferences for integrating into white, English-speaking communities. The willingness to pay to live in a community with more own language speakers and that for living in a community with more white, English speakers are negatively correlated. Considering any two of the four minority groups, it is observed that there is a positive correlation between the groups' willingness to pay to live in a community with more of the other group. A corollary inference is that to integrate more into the mainstream, a minority group would choose to live in a community with fewer people who speak their language, but they would not necessarily be willing to lower the percentage of other minority groups. Minority groups who prefer not to integrate into the mainstream would prefer to live in communities with more people who speak their language.