Abstract
In this paper, we examine the contributions of travel distance and preferences for racial homogeneity as sources of nursing home segregation and racial disparities in nursing home quality. We first theoretically characterize the distinctive implications of these mechanisms for nursing home racial segregation. We then use this model to structure an empirical analysis of nursing home sorting. We find little evidence of differential willingness to pay for quality by race among first-time nursing home entrants, but do find significant distance and race-based preference effects. Simulation exercises suggest that both effects contribute importantly to racial disparities in nursing home quality.