Social Interactions, Racial Segregation and The Dynamics of Tipping

We develop an analytically tractable agent-based model of heterogeneous agents to characterize how social interactions within a neighborhood determine the dynamic evolution of its ethnic composition. We characterize the conditions under which integration or segregation will occur, which depends on how the social externality parameter compares with the net benefit from leaving. Minority segregation may result from the process of tipping, and in such a case we identify three possible tipping channels: two are related to exogenous shocks (migration ows and changes in tipping points) and one is related to the endogenous probabilistic features of our framework (endogenous coordination across agents). This characterization of integration and segregation conditions yields interesting policy implications for both social and urban planning policies that favor desegregation.