Department of Economics and Business - Universitat Pompeu Fabra

Title:: Consumption segregation
Authors:: Corina Boar and Elisa Giannone
Date:: July 2023
Abstract:: This paper introduces consumption segregation, a new margin of residential segregation, and examines its patterns, causes, and discusses its aggregate consequences. We use new longitudinal and highly granular data to measure consumption segregation in the United States and document that it is high but relatively stable over the past 15 years, with substantial regional variation. We find that income segregation plays a more prominent role than other forms of segregation in driving consumption segregation, mainly due to the inability to smooth shocks to income. We illustrate a new mechanism through which, in the presence of social comparisons, consumption segregation can exacerbate wealth inequality.
JEL codes:: E20, R2
Area of Research:: Statistics, Econometrics and Quantitative Methods

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