Are people willing to pay for less segregation? Evidence from U.S. internal migration

•We estimate a migration choice model to measure people’s willingness to pay for reduced segregation.•Using decennial census data from 1980 to 2000, we provide new evidence that racial segregation is socially undesirable.•It is shown that both black and white migrants prefer to live in less segregated cities.

It is difficult to determine whether racial housing segregation is socially desirable, because segregation has some effects that are hard to measure. To overcome this challenge, we estimate a migration choice model to measure the willingness to pay for reduced segregation. The key idea underlying our empirical approach is that if segregation is undesirable, migrants should be willing to give up some earnings to avoid living in segregated cities. Using decennial census data from 1980 to 2000, we provide evidence that segregation is an urban disamenity. It is shown that both black and white migrants prefer to live in less segregated cities. For example, for a one percentage point reduction in the dissimilarity index, the estimated marginal willingness to pay of blacks is $436 (in 1999 dollars) in 2000. Among whites, this marginal willingness to pay is $301.