Racial Discrimination and Redlining in Cities

We propose a model where employers have two types of prejudices: racial and spatial discriminations. Because of the rst one, black workers have less chance than white workers to nd a job. Because of the second one, workers living closer to the city-center have less chances than suburban workers to nd a job. In this context, we show that depending on the importance of access costs to employment centers two urban equilibria may emerge. In Equilibrium 1 (the access cost for blacks is quite large), black and white workers are totally separated while in Equilibrium 2 (the access cost for blacks is relatively small), workers are separated by their employment status (the unemployed versus the employed). We then study the labor market equilibrium and its interactions with the land market. We show in particular that both race and space matter to explain high unemployment rates among blacks.