The Wrong Side(s) of the Tracks: The Causal Effects of Racial Segregation on Urban Poverty and Inequality
Elizabeth Oltmans Ananat (Duke University, Institute of Public Policy)
Monday, 9-22-2008. ARCHIVED EVENT
Location: 6050 ISR Thompson St
Jointly sponsored by PSC and the National Poverty Center.
At the metropolitan level there is a striking negative correlation between residential racial segregation and population characteristics-particularly for black residents-but it is widely recognized that this correlation may not be causal. This paper provides a novel test of the causal relationship between segregation and population outcomes by exploiting the arrangements of railroad tracks in the 19th century to isolate plausibly exogenous variation in cities' susceptibility to segregation. I show that, conditional on miles of railroad track laid, the extent to which track configurations physically subdivided cities strongly predicts the level of segregation that ensued after the Great Migration of African-Americans to northern and western cities in the 20th century. At the start of the Great Migration, though, track configurations were uncorrelated with racial concentration, ethnic dispersion, income, industry, education, and population, indicating that reverse causality is unlikely. Even today, track configurations have no correlation with population characteristics in cities that were too far from the South to have received significant black in-migration, which indicates that track configuration does not affect cities through any channel other than racial segregation. Instrumental variables estimates demonstrate that segregation increases black poverty and overall black-white income disparities, while decreasing white poverty and inequality within the white population.