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  4. April 2011
  5. The Wrong Side(s) of the Tracks: The Causal Effects of Racial Segregation on Urban Poverty and Inequality

American Economic Journal:
Applied Economics

ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)

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

  • Elizabeth Oltmans Ananat
American Economic Journal: Applied Economics
vol. 3, no. 2, April 2011
(pp. 34–66)
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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)

Citation

Ananat, Elizabeth Oltmans. 2011. "The Wrong Side(s) of the Tracks: The Causal Effects of Racial Segregation on Urban Poverty and Inequality." American Economic Journal: Applied Economics, 3 (2): 34–66. DOI: 10.1257/app.3.2.34

Additional Materials

JEL Classification

  • I32 Measurement and Analysis of Poverty
  • J15 Economics of Minorities and Races; 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 Regional and Urban History: U.S.; Canada: Pre-1913
  • N92 Regional and Urban History: U.S.; Canada: 1913-
  • R23 Urban, Rural, and Regional Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
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