Metropolises are large urban areas or cities that are significant political, economic and social cultural centers for a given region or country. They are also important hubs for international or regional commerce, communications and connections. In reference to large cities, neighborhoods are usually districts or localities characterized by certain ranks and qualities of its inhabitants. Therefore, neighborhood segregation refers to the physical separation of urban localities or residents into two or more neighborhoods. Although neighborhood segregation had been attributed to social courses such as ethnicity, racism and cultures, in the last few decades, there is growing evidence that differences in economic statuses are the key underpinning cause for neighborhood segregations in urban areas. Areas that were predominantly inhabited by a single social cultural grouping have modestly or wholly become diverse from the 1970s decade (Rosenthal and Ross 8-13). In the City of Detroit, regions that were predominantly inhabited by blacks have been left entirely; the blacks have migrated to racially mixed areas. The same has been the scenario with those areas that were traditionally Latino. Latino-white integration has been rising sharply since 2000 in metropolises found in the Midwest and Southeast such as Columbus, Ohio and Memphis, Tennessee. It is indicated that as people in all races experienced upward movements in their economic statuses, they become economically mobile by moving into suburban areas (Rosenthal and Ross 8-13). This paper therefore explores the fact that they are economic reasons that are causal to neighborhood segregations in metropolises. There will be also a discussion on policy implications for helping members of poor neighborhoods to overcome their poor conditions.
Economic Causes of Neighborhood Segregation
Relationship between increase in income and migrations to prosperous neighborhoods
Although neighborhood segregations in 1960s and before were attributed to racism by researchers, the real cause was that social groupings in low ranked neighborhoods had low economic statuses in general (Bischoff and Reardon 34-40). It is evident from the US Census statistics that in 1960s and prior to that, communities that experienced general low economic statuses tended to live in poor neighborhoods. From 1960s, civil rights movements begun agitating for economic justices and other connected social issues such as equal education opportunities and voting rights. Federal legislations outlawing all forms of discriminations in employment, voting and education were passed. Consequently, industries such as textile industries have experienced large declines in segregations, resulting in increases of incomes among black people in 1960s to 70s. Despite these increases in incomes, the workers were also able to send their children in schools and colleges. When the children graduated, they took advantage of expanding opportunities in employment and education to improve their living standards. In an economically segregated urban area, those individuals growing up in poor neighborhoods will experience lower quality education, more violence and fewer economic opportunities. Upward mobility into a prosperous neighborhood is likely if one’s income level increases. As economic opportunities continue to be available to everybody, people from all racial groups are moving to prosperous neighborhoods. According to the Economic Theory on Sorting and Opportunity, any wealthy individual from any racial or ethnic group wants to be in a neighborhood that offers well-resourced school, shields from social problems, advantaged social networks and more economic opportunities of advanced incomes (Boustan 2-10). In this case, it is apparent that despite being enabled by economic status to stay in a given neighborhood, families are also being motivated to stay in prosperous neighborhoods due to economically valid reasons.
Relationship between paying rent and income
There has been a very strong correlation between rent payment and income levels. Income levels determine the quality of a house that a person can rent. Different neighborhoods with rental houses usually differ in prices depending on quality of houses and proximities to economically strategic places such as business district, industries, schools and so forth. This is also the case with living in a certain location in the same neighborhood. Residing near strategic places such as parks, schools, market, and places of employment will have the neighborhood dweller paying higher rent (Bischoff and Reardon 34-40). In 2000, trends in rental prices pushed many people to the streets. There have been witnessed a declining number of low-income rental units due to highly accelerated prices. This has increased dramatically the number of homeless people. These homeless people who cannot afford to rent even low priced units will be pushed out of the richer neighborhoods. It can be noted that neighborhood segregation are clearly related to income distributions. People in a certain neighborhood with rental house can depict the average income of people in that neighborhood (Bischoff and Reardon 34-40).
Economic indicators and neighborhood distribution disturbances
Most economists agree that economic indicators such as inflation and interest rates can best tell disturbances in rent and, thus, neighborhood immigration disturbances. During high inflations, most rent prices are usually high. Increases in prices will make many people to move from prosperous neighborhoods to poor neighborhood. This has been evidenced in Australian rental market: during inflation, there exist a lot of vacancies in prosperous neighborhoods. The level of supply usually exceeds that of demand in such markets. Interest rate is another economic indicator that can determine distribution of people in differently economic determined neighborhoods. Higher interest rates can make mortgages costs to escalate. If servicing costs of the mortgage become very high, it can be evident that rental house construction investors can be pressured to increase rent prices to recoup them. The rent prices can escalate further if they are met with higher demands for housing from customers. People who cannot afford renting a house in prosperous neighborhood would be forced to relocate to poor neighborhoods. High demands can be created by high rates of immigrations from overseas. In countries like Australia and the US, the high net-effect of migration could bolster rental prices. If those arriving cannot afford certain kinds of housing, they may be forced to go to poor neighborhoods. At its peak, unaffordable interest rate may hinder the development of more developed neighborhoods due to high service costs for mortgages (Housing Industry Association 1-7).
Wealth and homeownership
Neighborhood segregation is also determined by homeownership abilities. Those with already accumulated wealth will find it easy to own a home, because they can successfully find mortgage underwriters. More wealth can enable one to obtain a mortgage that is underwritten at relatively favorable terms like low interest rates. Connected to this observation is that since owning a home is usually part of wealth expansion among wealthy people, only those that have higher wealth will find owning homes in wealthy neighborhoods favorable and affordable.
During recession, people of lower or more moderate wealth are usually forced out of richer neighborhoods (Herbert, McCue, and Sanchez-Moyano 1-5). Regardless of one’s social background, people living in prosperous neighborhoods are always materialistic because they are wealthy. Such people are usually bombarded with abundance of investment banks around, luxurious cars, and other affluent facilities. During recession, it has been evident that people from prosperous neighborhoods are forced out of them if they become insolvent (Herbert, McCue, and Sanchez-Moyano 1-5).
Economic vicious cycles and neighborhoods
Neighborhood segregation can be cyclical if no favorable measures are taken to address the issue of social and economic mobility among all citizens in the country. Kain’s work on Spatial Mismatch has noted that people segregated in poor neighborhoods would continue to live in them in several generations (Massey 1-5). Residents of poor neighborhoods usually face high commuting costs and are likely not to get immediate information regarding job openings. Although such communities may get windfall firms migrating near them, they would not experience any significant increments in their incomes or wealth. Such firms are usually smaller, requiring people with less complex skills and thus paying them low salaries (United States Census Bureau 6).
Richer neighborhood effects
Studies have found that richer neighborhoods usually have positive effects on poor neighborhoods in form of spillovers or externalities. A poor neighborhood is likely to benefit from the proximity it has with a rich neighborhood. People from poor neighborhood can go to work in richer neighborhoods and earn higher incomes. There will be also positive spillovers in terms of transport and communication systems. If richer neighborhoods have magnificent roads that connect other richer areas via poor areas, people from poor areas will experience its positive effects. Other common utilities such as gymnasiums, hospitals, and schools are likely to benefit people from both sides (Bischoff and Reardon 34-40).
Changing neighborhood quality standards due to economic reasons
Taking a stand that rich or poor neighborhoods will always remain fixed may not be correct in some cases. Depending on the propensity of economic activities in certain city area, a neighborhood can become richer or poorer. Calculations of economic activities of some neighborhoods in US large cities from 1950s to 2000 have revealed that standards of lives have either gone upward or downwards. About 34.21% of all low-income neighborhood were still of low-income in 2000 since they were measured in 1950s. Others had improved onto the levels of lower-middle income, upper-middle income and high-income. It is evident that the development of a neighborhood cannot be treated as stationary. These changes of neighborhoods have been accompanied by changes in economic statuses. Mean reversions have also been witnessed for a long period of time. There are those neighborhoods that were rich initially, but have been reverting. Economic statuses of neighborhoods such as that of Harlem have been fluctuating from time to time. It should be noted that although Harlem was initially inhabited by a black majority of low income, its economic standard has risen and it is now inhabited by almost people from all social-economic backgrounds (Rosenthal and Ross 8-13).
Proximity to economically strategic point
In some cities, nearness to the Central Business District will determine the location and economic status of a given neighborhood. In case most people in the city commute, neighborhoods that are closer to the central business district will have to pay more on rent due to the commuting costs they could be saving. Thus, people far away from the central business will be obliged to pay more on commuting but less on rent. The converse can arise if suburbs are richer than the inner city. If suburban household income is more than that of the central business district, people of low incomes will be expected to live and work near cities. Only rich people will afford to live in suburban regions because they are too expensive. In the suburbs, only those with private cars can access employment on daily basis; this makes commuting hard for people with low income. Otherwise, it becomes more convenient for people with low incomes to live and work near or towards the central district because of plenty public transport means (Rosenthal and Ross 8-14).
Economic Policy Intervention
Since poor neighborhoods are usually inhabited by people of low economic statuses, as evidenced by low incomes and little wealth, the government has to develop plausible compensatory measures. These measures are aimed at putting those in poor neighborhoods at relatively higher economic levels with more enabled savings (Massey 1-5).
Public transport and commuting costs
One of the problem that may make people spiraled in the vicious cycle of poor neighborhood is that they lack affordable transportation means. The lack of affordable transport services hinders them from getting to work in richer suburbs and taking children in quality schools. The state has to set up affordable public transport systems for the poor to have opportunities of working in neighborhoods or suburbs that pay higher wages. If the public transport becomes assured for everybody, there will be no doubt that everybody will have a better opportunity of getting to city places that pay high wages (Massey 1-5).
Improved communication systems
The poor neighborhoods may also not be served with reliable means of communication for getting information about job-openings. Richer families usually gain access to superior communication means easily and they are likely to gain information on job openings efficiently and effectively. Job openings, especially those in the public service, should be advertised at specific points that everybody can see. This guarantees equal and timely access to job information for everybody to have equal opportunities of participating in job recruitment and selection (Massey 1-5).
Quality and enough public service and utilities
For more economic compensatory measures to the people of poor neighborhoods, the government should institute quality and sufficient public service and public service. Services such as those of health, education, security and housing should be assured. Since people from poor neighborhoods are usually not affording the costs of such services, the government should find ways to subsidize them (Massey 1-5).
Give housing a special consideration
Houses in poor neighborhoods are usually in deteriorating conditions. The government has to consider frequent redevelopment of deteriorating house to keep them in good quality and affordable so that people in the poor neighborhoods can keep staying in them. House maintenance usually involves replacing leaky roof, installing new furniture, repairing rotted windows frames, and so forth. The housing project has to consider conserving and reclaiming the natural environment (Massey 1-5; Rosenthal and Ross 66-88).
Development in linguistic and cultural barriers
New immigrants have always faced linguistic barriers when they enter a foreign country like the United States or the UK for the first time. The linguistic barriers are not only exhibited at the work place but also at school. Accompanied with linguistic barriers are religious and cultural barriers. Cultural and linguistic barriers may influence a person not to work with people from different social-cultural groupings. There should be cultural and linguistic literacy classes on both employees and employers so that the former can be well absorbed into the work force (Rosenthal and Ross 66-70)
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Demands of labor
In a bid to help people from poor neighborhoods, too, the government policy makers have to consider labor and productivity demands in a given metropolitan. Usually, metropolises have diverse economies: policy makers have to consider skills and knowledge which industries in their metropolises demand. There should be training institutions to help people from poor neighborhoods for them to work in manufacturing industries that demand their labor. Massive flow of African-Americans from rural areas and poor neighborhoods in 1960s made them to be absorbed in manufacturing jobs. The jobs kept them with higher salaries to contribute and remake highly prosperous African-American neighborhoods such as Harlem. Evidently, there is no doubt that if institutions offering relevant skills are established in poor neighborhoods, the residents themselves will contribute to their prosperities (Massey 1-5).
Government regulation on housing in growing cities
Studies have indicated that mismatches between housing demands and supplies are on the rise in some urban areas. While there may be housing shortage and high house prices in some cities, other cities usually experience building abandonments. Metropolitan areas of New York are experiencing increasing rental prices because investors are not building new houses. The land has shrunk, making neighborhood expansion impossible, but people are still in need of housing services. Very high prices usually push people to poor neighborhoods or on the street. On the other hand, neighborhoods in the rust belt of the United States led by those in the City of Detroit are shrinking. The supplies of houses in such areas are highly inelastic because housing demands have been declining. When the demands continue falling, it should be expected that prices will also fall. When investors experience declines in prices, they will stop to build more houses. It will be important if the government relocates some business activities in such areas to boost demands of neighborhoods with highly durable houses and reduce pressure on highly congested cities like New York (Rosenthal and Ross 66-89)
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Conclusion
The major theme of this discussion has been that it is largely an individual’s economic status that will determine his or her neighborhood of choice. At an individual level, one’s income and wealth determine the neighborhood in which he can live. At a meso-economic level, factors such as richer neighborhood effect and proximity to strategically economic places such as the central business district will determine where one can live. Macroeconomic indicators such inflation and interest rates can also affect where a person can stay. To help people from poor neighborhoods, it is important that quality and affordable public amenities and utilities such as roads, communication means, hospital and schools and college training are available. A special consideration should be given to housing planning so that houses are maintained and developed to better statuses. Nevertheless, there should be proper match-up between supply and demand of houses by regulating business activities for the rent to remain affordable. In short, to help such residents of poor neighborhoods for them to migrate to other neighborhoods, spatial and job structural mismatches have to be eliminated. Physical distances should be reduced by means of affordable transport, and there should be strategies for information gains among all members of the neighborhood regarding job openings. These measures will reduce sprawling neighborhood differences due to sharp increases in economic inequality
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