Tim Harford has the best exposition of Tom Schelling’s segregation model I have read. Maybe no one prefers segregation, but if you mind being a minority in a neighborhood an invisible hand process can lead to segregated outcomes. Individuals will move closer to their compatriots, giving rise to an overall separation of groups. This paper has some good models and fills out the main conditions behind the result.
But is it true? Schelling would be the first to admit he created only a partial model. Human genetics show more and more out-breeding over time. Those first cousins just don’t cut it any more. No, the earth isn’t flat but outmigration is increasing and many more people are choosing to live as minorities in foreign lands, most of all in the EU. I live in Northern Virginia, one of the most successfully integrated regions of the United States, whether it be along lines of race, religion, or nationality. Latino arrivals are concentrated in the American Southwest but over time they are spreading out to many other states. What is the segregation model missing?
Gains from trade, in a nutshell. If I’m the first Mexican to arrive in North Carolina, yes maybe I feel lonely. But I also can fill some empty economic niches and overall it may beat East L.A. Other immigrants will follow, but if too many come some of them will move on to South Carolina. And so on.
High levels of inequality often bring more integration, at least in terms of spatial proximity. Even with high rents there is a large community of Latinos living just outside of Aspen, Colorado. Guess why. They don’t live right next to the very rich but they do live among non-Latinos. And the greater availability of cheap services is one reason I prefer life in the United States to Western Europe. Cheap shipping of goods means I still can get French cheese and German books.
It is harder to ship services. The more we become a service economy, the more you have to live near the people you trade with.
So what’s the problem in Newark, NJ or for that matter Northeast Washington? Schelling’s model seems to work better there perhaps because of high unemployment and fewer services. That said, both areas have seen considerable Latino integration over the last twenty years, as well as outmigration to the suburbs.
Thus the more general model starts with the idea of gains from trade and then asks when those gains won’t be especially strong, or when they won’t require much physical proximity. Note that Schelling’s original paper, published in 1971, very much represents a 1960s perspective on its topic.
Addendum: Tim Harford also discusses urban crime and its control; here’s a good new paper on that topic.