Dynamics of Income Segregation & Income Inequality

In this study, to shed more light on income segregation, an agent-based model is built to investigate how income inequality affects income segregation and its characteristics. The model is capable of demonstrating the expected positive relationship between income inequality and income segregation both statistically and visually. In addition, it is found that income inequality conditions the possible levels of income segregation although its positive impact tends to saturate at higher levels. To study the characteristics of income segregation, a typology of its profiles is elaborated and the impact of the shape of income inequality on them is studied. We argue that formation or expansion of affluent neighborhoods or gated communities has a positive impact on formation or expansion of ghettos or slums in a city, and vice versa. Furthermore, we suggest that distribution of economical and status-seeking movements among different segments of population can be interpreted as the material cause of the shape of income segregation profiles. This inquiry is further enriched by focusing on the segregation of the poorest and the richest households. Size of the neighborhoods, a natural mixing of the households, and housing market’s inefficiency are discussed as potential influencers of them. Results suggest that market’s inefficiency is the main driver of the characteristics of segregation of the poorest whereas natural mixing is suspected as formative of the segregation of the richest. Further research is needed to detail the intermediate links connecting income distribution and housing market to explain how income distribution influences households’ movement attitudes and behaviors by also shaping housing market.