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Income Segregation and the Rise of the Knowledge Economy

  • Enrico Berkes
  • Ruben Gaetani
American Economic Journal: Applied Economics
vol. 15, no. 2, April 2023
(pp. 69-102)
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Abstract

We analyze the effect of an increase in knowledge-intensive activities on spatial inequality in US cities. We leverage a predetermined network of patent citations to instrument for local innovation trends. Between 1990 and 2010, a one-standard-deviation increase in patent growth increases income segregation by 0.65 Gini points, corresponding to 0.31 standard deviations of the over-time change in income segregation. This effect mainly arises from the sorting of residents by income, occupation, and education. Local shocks to innovation induce a clustering of knowledge-intensive jobs and residents, amplified by the response of rents and amenities.

Citation

Berkes, Enrico, and Ruben Gaetani. 2023. "Income Segregation and the Rise of the Knowledge Economy." American Economic Journal: Applied Economics, 15 (2): 69-102. DOI: 10.1257/app.20210074

Additional Materials

JEL Classification

  • D31 Personal Income, Wealth, and Their Distributions
  • O31 Innovation and Invention: Processes and Incentives
  • O33 Technological Change: Choices and Consequences; Diffusion Processes
  • O34 Intellectual Property and Intellectual Capital
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
  • R32 Other Spatial Production and Pricing Analysis
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