Income Inequality and Residential Segregation

From 1990 until today, income inequality (Gini coefficient) increased by over 30%, and residential income segregation increased by approximately 50% (Neighborhood Sorting Index) in Sweden. Such social polarization has not passed without public attention and terms such as “socially excluded groups” (”utsatta grupper” in Swedish) and “exposed areas” (”utsatta områden” in Swedish) are now extensively used in the political debate. We investigate effects of income inequality on residential income segregation by neighborhoods using Swedish full-population data from 1991-2014. To isolate residential sorting effects, we exploit the income distribution of in-moving individuals, unaffected by confounding neighborhood effects in the destination municipality, as an exogenous inequality shock.


Che-Yuan Liang
Xiao Hu