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The Wrong Side(s) of the Tracks: The Causal Effects of Racial Segregation on Urban Poverty and Inequality

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  • Elizabeth Oltmans Ananat

Abstract

A striking negative correlation exists between an area's residential racial segregation and its population characteristics, but it is recognized that this relationship may not be causal. I present a novel test of causality from segregation to population characteristics by exploiting the arrangements of railroad tracks in the nineteenth century to isolate plausibly exogenous variation in areas' susceptibility to segregation. I show that this variation satisfies the requirements for a valid instrument. Instrumental variables estimates demonstrate that segregation increases metropolitan rates of black poverty and overall black-white income disparities, while decreasing rates of white poverty and inequality within the white population. (JEL I32, J15, N31, N32, N91, N92, R23)

Suggested Citation

  • Elizabeth Oltmans Ananat, 2011. "The Wrong Side(s) of the Tracks: The Causal Effects of Racial Segregation on Urban Poverty and Inequality," American Economic Journal: Applied Economics, American Economic Association, vol. 3(2), pages 34-66, April.
  • Handle: RePEc:aea:aejapp:v:3:y:2011:i:2:p:34-66 Note: DOI: 10.1257/app.3.2.34
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    References listed on IDEAS

    as
    1. David Card & Alan B. Krueger, 1996. "School Resources and Student Outcomes: An Overview of the Literature and New Evidence from North and South Carolina," Journal of Economic Perspectives, American Economic Association, pages 31-50.
    2. David Card & Alan B. Krueger, 1996. "School Resources and Student Outcomes: An Overview of the Literature and New Evidence from North and South Carolina," Journal of Economic Perspectives, American Economic Association, pages 31-50.
    3. Collins, William J. & Margo, Robert A., 2000. "Residential segregation and socioeconomic outcomes: When did ghettos go bad?," Economics Letters, Elsevier, vol. 69(2), pages 239-243, November.
    4. William J. Collins, 2001. "Race, Roosevelt, and Wartime Production: Fair Employment in World War II Labor Markets," American Economic Review, American Economic Association, pages 272-286.
    5. David M. Cutler & Edward L. Glaeser & Jacob L. Vigdor, 2008. "Is the Melting Pot Still Hot? Explaining the Resurgence of Immigrant Segregation," The Review of Economics and Statistics, MIT Press, pages 478-497.
    6. Vigdor, Jacob L., 2002. "The Pursuit of Opportunity: Explaining Selective Black Migration," Journal of Urban Economics, Elsevier, vol. 51(3), pages 391-417, May.
    7. Nathaniel Baum-Snow, 2007. "Did Highways Cause Suburbanization?," The Quarterly Journal of Economics, Oxford University Press, vol. 122(2), pages 775-805.
    8. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    9. repec:fth:prinin:366 is not listed on IDEAS
    10. Leah Platt Boustan, 2010. "Was Postwar Suburbanization "White Flight"? Evidence from the Black Migration," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 417-443.
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    Citations

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    Cited by:

    1. Lévêque, Christophe & Saleh, Mohamed, 2016. "Does Industrialization Affect Segregation? Evidence from Nineteenth-Century Cairo," TSE Working Papers 17-758, Toulouse School of Economics (TSE), revised May 2017.
    2. Bryan S. Graham, 2016. "Identifying and Estimating Neighborhood Effects," NBER Working Papers 22575, National Bureau of Economic Research, Inc.
    3. Elizabeth Ananat & Shihe Fu & Stephen L. Ross, 2013. "Race-Specific Agglomeration Economies: Social Distance and the Black-White Wage Gap," Working papers 2013-08, University of Connecticut, Department of Economics.
    4. Hinrichs, Peter, 2014. "An Empirical Analysis of Racial Segregation in Higher Education," Working Paper 1435, Federal Reserve Bank of Cleveland.
    5. Bayer, Patrick & Fang, Hanming & McMillan, Robert, 2014. "Separate when equal? Racial inequality and residential segregation," Journal of Urban Economics, Elsevier, vol. 82(C), pages 32-48.
    6. Monica Langella & Alan Manning, 2016. "Diversity and Neighbourhood Satisfaction," CEP Discussion Papers dp1459, Centre for Economic Performance, LSE.
    7. Eric Fesselmeyer & Kiat Ying Seah, 2017. "Neighborhood Segregation and Black Entrepreneurship," ERES eres2017_277, European Real Estate Society (ERES).
    8. repec:kap:poprpr:v:36:y:2017:i:4:d:10.1007_s11113-017-9429-1 is not listed on IDEAS
    9. Zhang, Junfu & Zheng, Liang, 2015. "Are people willing to pay for less segregation? Evidence from U.S. internal migration," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 97-112.
    10. Mele, Angelo, 2013. "Poisson indices of segregation," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 65-85.
    11. Dieterle, Steven G. & Snell, Andy, 2016. "A simple diagnostic to investigate instrument validity and heterogeneous effects when using a single instrument," Labour Economics, Elsevier, vol. 42(C), pages 76-86.
    12. repec:eee:regeco:v:66:y:2017:i:c:p:198-212 is not listed on IDEAS
    13. Boustan, Leah P. & Margo, Robert A., 2013. "A silver lining to white flight? White suburbanization and African–American homeownership, 1940–1980," Journal of Urban Economics, Elsevier, vol. 78(C), pages 71-80.
    14. repec:eee:socmed:v:187:y:2017:i:c:p:85-92 is not listed on IDEAS
    15. repec:spr:demogr:v:54:y:2017:i:4:d:10.1007_s13524-017-0597-8 is not listed on IDEAS
    16. Fesselmeyer, Eric & Seah, Kiat Ying, 2017. "Neighborhood segregation and black entrepreneurship," Economics Letters, Elsevier, vol. 154(C), pages 88-91.

    More about this item

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • N31 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: Pre-1913
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • N91 - Economic History - - Regional and Urban History - - - U.S.; Canada: Pre-1913
    • N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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