Collective Action, White Flight, and the Origins of Municipal Segregation Laws

Abstract: Residential segregation is among the most durable and salient features of American urban life. It is widely recognized that governments at all levels have played at least some role in promoting and sustaining residential segregation. At the federal level, for example, urban renewal projects, federally-financed highway construction, and lending practices promulgated by New Deal agencies are often invoked as explanatory factors in the rise of segregation. Similarly, at the local level, zoning laws and ordinances are often thought to have helped create racial disparities in access to housing. In this paper, we ask: how and why did residential segregation in American cities come to enjoy state sponsorship? We present a simple model that suggests two processes drove demand for state-sponsored segregation: increased housing demand among African Americans; and a reduced ability among white communities to enforce informal norms through private vigilante activity. Formal econometric tests are consistent with these predictions.