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American Economic Journal: Applied Economics: Vol. 3 No. 2 (April 2011)

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

Article 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

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)

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Authors

Ananat, Elizabeth Oltmans (Duke U)

JEL Classifications

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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