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Re‐assessing the Spatial Mismatch Hypothesis

Author

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  • David Card
  • Jesse Rothstein
  • Moises Yi

Abstract

We use detailed location information from the Longitudinal Employer‐Household Dynamics (LEHD) database to develop new evidence on the effects of spatial mismatch on the relative earnings of Black workers in large US cities. We classify workplaces by the size of the pay premiums they offer in a two‐way fixed effects model, providing a simple metric for defining “good” jobs. We show that: (a) Black workers earn nearly the same average wage premiums as whites; (b) in most cities Black workers live closer to jobs, and closer to good jobs, than do whites; (c) Black workers typically commute shorter distances than whites; and (d) people who commute further earn higher average pay premiums, but the elasticity with respect to distance traveled is slightly lower for Black workers. We conclude that geographic proximity to good jobs is unlikely to be a major source of the racial earnings gaps in major U.S. cities today.

Suggested Citation

  • David Card & Jesse Rothstein & Moises Yi, 2025. "Re‐assessing the Spatial Mismatch Hypothesis," Opportunity and Inclusive Growth Institute Working Papers 116, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmoi:102065
    DOI: 10.21034/iwp.116
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    Cited by:

    1. is not listed on IDEAS
    2. David Card & Jesse Rothstein & Moises Yi, 2026. "How Do Neighborhoods and Firms Affect Intergenerational Mobility?," Working Papers 26-18, Center for Economic Studies, U.S. Census Bureau.

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    Keywords

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    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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