Changes in the ethnic composition of neighbourhoods: Analysis of household's response and asymmetric preference structures

Theoretical models of ethnic residential segregation indicate asymmetries in preferences as the key driver of ethnic segregation dynamics. This study uses a pivoted choice experiment to empirically analyse the asymmetric preference structures for ethnic composition of neighbourhoods. We assume that the utilities of various alternative residential locations are dependent on the experienced levels of co‐ethnics or ethnic minorities in the current neighbourhood of residence, where the increases in current ethnic concentrations could be evaluated differently than decreases. Results from a discrete choice model estimated on data from Swiss city of Lugano confirm the existence of asymmetries, showing that individuals tend to be averse to decreases in the share of their co‐nationals, while being indifferent to any increases.