Mortgage Credit and Racial Segregation

Abstract: 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 school demographics from 1995 to 2007, matched to a national comprehensive dataset of mortgage originations, to document the link between credit supply and schools' racial demographics. Effects are large and significant.

Amine Ouazad is Assistant Professor of Economics at INSEAD. He holds a Ph.D. from the Paris School of Economics and graduated from the Ecole polytechnique in 2003. Amine is also an associate researcher at the Centre for Economic Performance, London School of Economics and is affiliated to CREST-INSEE. He has taught microeconomics for four years at the London School of Economics, the Institute for Political Science in Paris, 'Sciences Po', and ENSAE. Prior to joining INSEAD faculty in 2008, Amine has been a research associate at the London School of Economics, a junior researcher at CREST-INSEE, and a visiting researcher at Princeton University. Amine's research focuses on the economics of discrimination, the economics of education and labor economics. More specifically, Amine has worked with U.K. and U.S. data to analyze the determinants of inequalities and racial and gender biases. He has presented his work at the London School of Economics, the University of Amsterdam, Princeton University, Boston College, Columbia University, Uppsala University, the Paris School of Economics, University College London, the European Institute in Florence, Cornell University, Carlos III in Madrid, New York University, CREST-INSEE and the University of Bonn. He is a referee for the Economic Journal.

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