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The Impact of Racial Segregation on College Attainment in Spatial Equilibrium

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Abstract

This paper seeks to understand the forces that maintain racial segregation and the Black-White gap in college attainment, as well as their interactions with place-based policy interventions. We incorporate race into an overlapping-generations spatial-equilibrium model with neighborhood spillovers. Race matters due to: (i) a Black-White wage gap, (ii) amenity externalities---households care about their neighborhood's racial composition---and (iii) additional barriers to moving for Black households. We find that these forces account for 71% of the racial segregation and 64% of the Black-White gap in college attainment for the St. Louis metro area. The presence of spillovers and externalities generates multiple equilibria. Although St. Louis is in a segregated equilibrium, there also exists an integrated equilibrium with a lower college gap. We show that place-based policy interventions can reduce segregation and destabilize the segregated equilibrium.

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  • Victoria Gregory & Julian Kozlowski & Hannah Rubinton, 2022. "The Impact of Racial Segregation on College Attainment in Spatial Equilibrium," Working Papers 2022-036, Federal Reserve Bank of St. Louis, revised 06 May 2024.
    • Handle: RePEc:fip:fedlwp:94907
    DOI: 10.20955/wp.2022.036
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    More about this item

    Keywords

    racial disparities; neighborhood segregation; education; income inequality;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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