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Neighborhood Sorting, Metros, and Tomorrow’s Labor Force

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Abstract

In this Economic Commentary, we look at how households sort into neighborhoods in different metro areas and analyze these patterns by race, ethnicity, and income. We find that in many metros, Black households face a significant tradeoff between a neighborhood’s Black population share and its socioeconomic status (SES), with many high-income Black households residing in lower SES neighborhoods than is the case for white households of similar income. A similar pattern exists for Hispanic households. Because a neighborhood’s SES correlates with the labor market outcomes of the children who grow up there, these sorting patterns could, over time, act to limit workforce productivity, and individual earnings, by restraining skill acquisition for youth residing in under-resourced areas.

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  • Daniel R. Carroll & Christopher J. Walker, 2024. "Neighborhood Sorting, Metros, and Tomorrow’s Labor Force," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2024(12), pages 1-8, July.
    • Handle: RePEc:fip:fedcec:98540
    DOI: 10.26509/frbc-ec-202412
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    1. Dionissi Aliprantis & Francisca G.-C. Richter, 2020. "Evidence of Neighborhood Effects from Moving to Opportunity: Lates of Neighborhood Quality," The Review of Economics and Statistics, MIT Press, vol. 102(4), pages 633-647, October.
    2. Raj Chetty & Nathaniel Hendren & Maggie R Jones & Sonya R Porter, 2020. "Race and Economic Opportunity in the United States: an Intergenerational Perspective [“Intergenerational Mobility of Immigrants in the US Over Two Centuries,”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 711-783.
    3. Joseph G. Altonji & Richard K. Mansfield, 2018. "Estimating Group Effects Using Averages of Observables to Control for Sorting on Unobservables: School and Neighborhood Effects," American Economic Review, American Economic Association, vol. 108(10), pages 2902-2946, October.
    4. 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.
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