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Race-Specific Agglomeration Economies: Social Distance and the Black-White Wage Gap

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  • Elizabeth Ananat
  • Shihe Fu
  • Stephen L. Ross

Abstract

We present evidence that benefits from agglomeration concentrate within race. Cross-sectionally, the black-white wage gap increases by 2.5% for every million-person increase in urban population. Within cities, controlling for unobservable productivity through residential-tract-by-demographic indicators, blacks’ wages respond less than whites’ to surrounding economic activity. Individual wage returns to nearby employment density and human capital rise with the share of same-race workers. Manufacturing firms’ productivity rises with nearby activity only when they match nearby firms racially. Weaker cross-race interpersonal interactions are a plausible mechanism, as blacks in all-white workplaces report less closeness to whites than do even whites in all-nonwhite workplaces.

Suggested Citation

  • Elizabeth Ananat & Shihe Fu & Stephen L. Ross, 2013. "Race-Specific Agglomeration Economies: Social Distance and the Black-White Wage Gap," NBER Working Papers 18933, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18933
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    Cited by:

    1. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, Elsevier.
    2. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, Elsevier.
    3. Daniel S. Hamermesh & Katie R. Genadek & Michael C. Burda, 2017. "Racial/Ethnic Differences In Non-Work At Work," SFB 649 Discussion Papers SFB649DP2017-019, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    4. Camille Hémet & Clément Malgouyres, 2018. "Diversity and Employment Prospects: Neighbors Matter!," Journal of Human Resources, University of Wisconsin Press, vol. 53(3), pages 825-858.
    5. Ingrid Gould Ellen & Stephen L. Ross, 2018. "Race and the City," Working papers 2018-03, University of Connecticut, Department of Economics.
    6. Burda, Michael, 2017. "Racial/Ethnic Differences in Non-Work at Work," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168183, Verein für Socialpolitik / German Economic Association.
    7. Topa, Giorgio & Zenou, Yves, 2015. "Neighborhood and Network Effects," Handbook of Regional and Urban Economics, Elsevier.
    8. Crafts, Nicholas & Klein, Alexander, 2015. "Agglomeration Economies and Productivity Growth: U.S. Cities, 1880-1930," CEPR Discussion Papers 10673, C.E.P.R. Discussion Papers.
    9. Yang, Guangliang & Li, Lixing & Fu, Shihe, 2017. "Do Rural Migrants Benefit from Labor Market Agglomeration Economies? Evidence from Chinese Cities," MPRA Paper 80713, University Library of Munich, Germany.
    10. Ingrid Gould Ellen & Stephen L. Ross, 2018. "Race and the City," Working Papers 2018-022, Human Capital and Economic Opportunity Working Group.

    More about this item

    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
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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