Sorting or Steering: The Effects of Housing Discrimination on Neighborhood Choice

Growing evidence indicates that neighborhoods affect human capital accumulation, raising concern that the exclusionary effects of housing discrimination could contribute to persistent inequality in the United States. Using data from HUD's most recent Housing Discrimination Study and microlevel data on neighborhood attributes in 28 US cities, we find that minorities are steered toward neighborhoods with less economic opportunity and greater exposures to crime and pollution. Holding preferences and income constant, discriminatory steering alone can explain a disproportionate number of minority households found in high-poverty neighborhoods in the United States and the higher exposure of African American mothers to toxic pollutants.