[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/26143.html
   My bibliography  Save this paper

The End of the American Dream? Inequality and Segregation in US Cities

Author

Listed:
  • Alessandra Fogli
  • Veronica Guerrieri
Abstract
Since the '80s the US has experienced not only a steady increase in income inequality, but also a contemporaneous increase in residential segregation by income. Using US Census data, we first document a positive correlation between inequality and segregation at the MSA level between 1980 and 2010. We then develop a general equilibrium overlapping generations model where parents choose the neighborhood where to raise their children and invest in their children's education. In the model, segregation and inequality amplify each other because of a local spillover that affects the returns to education. We calibrate the model using 1980 US data and the micro estimates of the effect of neighborhood exposure in Chetty and Hendren (2018). We then assume that in 1980 an unexpected permanent skill premium shock hits the economy and show that segregation contributes to 28% of the subsequent increase in inequality.

Suggested Citation

  • Alessandra Fogli & Veronica Guerrieri, 2019. "The End of the American Dream? Inequality and Segregation in US Cities," NBER Working Papers 26143, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26143
    Note: EFG
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w26143.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brueckner, Jan K. & Thisse, Jacques-Francois & Zenou, Yves, 1999. "Why is central Paris rich and downtown Detroit poor?: An amenity-based theory," European Economic Review, Elsevier, vol. 43(1), pages 91-107, January.
    2. Philip Armour & Richard V. Burkhauser & Jeff Larrimore, 2016. "Using The Pareto Distribution To Improve Estimates Of Topcoded Earnings," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1263-1273, April.
    3. repec:bla:jpbect:v:2:y:2000:i:4:p:461-82 is not listed on IDEAS
    4. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-1189, December.
    5. Fabian Eckert & Tatjana Kleineberg, 2019. "Can We Save the American Dream? A Dynamic General Equilibrium Analysis of the Effects of School Financing on Local Opportunities," 2019 Meeting Papers 1197, Society for Economic Dynamics.
    6. Moretti, Enrico & Hsieh, Chang-Tai, 2015. "Why Do Cities Matter? Local Growth and Aggregate Growth," CEPR Discussion Papers 10604, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Suzane Bellue, 2023. "Why Don’t Poor Families Move? A Spatial Equilibirum Analysis of Parental Decisions with Social Learning," CRC TR 224 Discussion Paper Series crctr224_2023_472, University of Bonn and University of Mannheim, Germany.
    2. Jo Blanden & Matthias Doepke & Jan Stuhler, 2022. "Education inequality," CEP Discussion Papers dp1849, Centre for Economic Performance, LSE.
    3. Kulkarni, Nirupama & Malmendier, Ulrike, 2022. "Homeownership segregation," Journal of Monetary Economics, Elsevier, vol. 129(C), pages 123-149.
    4. Christian Schluter & Mark Trede, 2024. "Spatial earnings inequality," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 22(3), pages 531-550, September.
    5. Stephen J. Redding, 2022. "Suburbanization in the USA, 1970–2010," Economica, London School of Economics and Political Science, vol. 89(S1), pages 110-136, June.
    6. Stephen J. Redding & Daniel M. Sturm, 2024. "Neighborhood Effects: Evidence from Wartime Destruction in London," NBER Working Papers 32333, National Bureau of Economic Research, Inc.
    7. Redding, Stephen, 2021. "Suburbanization in the United States 1970-2010," LSE Research Online Documents on Economics 114437, London School of Economics and Political Science, LSE Library.
    8. Takeda, Kohei, 2022. "The geography of structural transformation: effects on inequality and mobility," LSE Research Online Documents on Economics 118050, London School of Economics and Political Science, LSE Library.
    9. Victor Couture & Cecile Gaubert & Jessie Handbury & Erik Hurst, 2019. "Income Growth and the Distributional Effects of Urban Spatial Sorting," NBER Working Papers 26142, National Bureau of Economic Research, Inc.
    10. Hennig, Jan-Luca, 2021. "Labor Market Polarization and Intergenerational Mobility: Theory and Evidence," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242353, Verein für Socialpolitik / German Economic Association.
    11. Andrew W. Nutting, 2023. "Geographic earnings inequality by race, 1960–2016," Journal of Regional Science, Wiley Blackwell, vol. 63(2), pages 290-339, March.
    12. Wright, Jacob & Zheng, Angela, 2024. "From Preschool to College: The Impact of Education Policies over the Lifecycle," IZA Discussion Papers 17301, Institute of Labor Economics (IZA).
    13. Jacob Wright & Angela Zheng, 2024. "From Preschool to College: The Impact of Education Policies over the Lifecycle," Department of Economics Working Papers 2024-07, McMaster University.
    14. Roland Bénabou, 2017. "Comment on "Understanding the Great Gatsby Curve"," NBER Chapters, in: NBER Macroeconomics Annual 2017, volume 32, pages 394-406, National Bureau of Economic Research, Inc.
    15. Oskari Harjunen & Tuukka Saarimaa & Janne Tukiainen, 2021. "Love Thy (Elected) Neighbor? Residential Segregation, Political Representation and Local Public Goods," Discussion Papers 138, Aboa Centre for Economics.
    16. Wangbao Liu, 2022. "Tenure-Based Housing Spatial Patterns and Residential Segregation in Guangzhou under the Background of Housing Market Reform," Sustainability, MDPI, vol. 14(8), pages 1-19, April.
    17. Jean-Felix Brouillette & Charles I. Jones & Peter J. Klenow, 2021. "Race and Economic Well-Being in the United States," NBER Working Papers 29539, National Bureau of Economic Research, Inc.
    18. Gerard Domènech-Arumí, 2022. "Neighborhoods, Perceived Inequality, and Preferences for Redistribution :Evidence from Barcelona," Working Papers ECARES 2022-09, ULB -- Universite Libre de Bruxelles.
    19. Victoria Gregory & Julian Kozlowski & Hannah Rubinton, 2022. "The Impact of Racial Segregation on College Attainment in Spatial Equilibrium," Working Papers 2022-036, Federal Reserve Bank of St. Louis, revised 27 Nov 2024.
    20. Alessandra Fogli, 2019. "The Research Agenda: Alessandra Fogli on Social Context and Macroeconomic Outcomes," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 20(2), November.
    21. Gallipoli, Giovanni, 2023. "Comments on unequal growth," Journal of Monetary Economics, Elsevier, vol. 133(C), pages 19-24.
    22. Eckert,Fabian & Kleineberg,Tatjana Karina, 2021. "Saving the American Dream ? Education Policies in Spatial General Equilibrium," Policy Research Working Paper Series 9574, The World Bank.
    23. Choi, Jaerim & Lim, Sunghun, 2023. "Ostrom Meets the Pandemic: Lessons from Asian Rice Farming Traditions," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334543, Agricultural Economics Society - AES.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rauh, Christopher, 2017. "Voting, education, and the Great Gatsby Curve," Journal of Public Economics, Elsevier, vol. 146(C), pages 1-14.
    2. Stef Proost & Jacques-François Thisse, 2019. "What Can Be Learned from Spatial Economics?," Journal of Economic Literature, American Economic Association, vol. 57(3), pages 575-643, September.
    3. Nakada, Minoru, 2017. "Distance to hazard: an environmental policy with income heterogeneity," Environment and Development Economics, Cambridge University Press, vol. 22(1), pages 51-65, February.
    4. Victor Couture & Cecile Gaubert & Jessie Handbury & Erik Hurst, 2019. "Income Growth and the Distributional Effects of Urban Spatial Sorting," NBER Working Papers 26142, National Bureau of Economic Research, Inc.
    5. Francisco Alvarez-Cuadrado & Ngo Van Long, 2012. "Envy and Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(3), pages 949-973, September.
    6. Elizabeth M. Caucutt & Lance Lochner & Youngmin Park, 2017. "Correlation, Consumption, Confusion, or Constraints: Why Do Poor Children Perform so Poorly?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(1), pages 102-147, January.
    7. Eckstein, Zvi & Zilcha, Itzhak, 1994. "The effects of compulsory schooling on growth, income distribution and welfare," Journal of Public Economics, Elsevier, vol. 54(3), pages 339-359, July.
    8. Andrés Rodríguez-Pose & Michael Storper, 2020. "Housing, urban growth and inequalities: The limits to deregulation and upzoning in reducing economic and spatial inequality," Urban Studies, Urban Studies Journal Limited, vol. 57(2), pages 223-248, February.
    9. Mikael Lindahl & Mårten Palme & Sofia Sandgren-Massih & Anna Sjögren, 2014. "A Test of the Becker-Tomes Model of Human Capital Transmission Using Microdata on Four Generations," Journal of Human Capital, University of Chicago Press, vol. 8(1), pages 80-96.
    10. Francesco Andreoli & Eugenio Peluso, 2016. "So close yet so unequal: Reconsidering spatial inequality in U.S. cities," Working Papers 21/2016, University of Verona, Department of Economics.
    11. Carl Gaigné & Jacques-François Thisse, 2013. "New Economic Geography and the City," Working Papers SMART 13-02, INRAE UMR SMART.
    12. Chong Lu, 2022. "The effect of migration on rural residents’ intergenerational subjective social status mobility in China," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(5), pages 3279-3308, October.
    13. Cheshire, Paul, 2009. "Policies for mixed communities: faith-based displacement activity?," LSE Research Online Documents on Economics 30783, London School of Economics and Political Science, LSE Library.
    14. Neidhöfer, Guido & Serrano, Joaquín & Gasparini, Leonardo, 2018. "Educational inequality and intergenerational mobility in Latin America: A new database," Journal of Development Economics, Elsevier, vol. 134(C), pages 329-349.
    15. Jere R. Behrman & Dante Contreras & Maria Isidora Palma & Esteban Puentes, 2024. "Socioeconomic Disparities for Early Childhood Anthropometrics and Vocabulary and Socio-emotional Skills: Dynamic Evidence from Chilean Longitudinal Data," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 43(1), pages 1-28, February.
    16. Nguyen Thang Dao & Julio Dávila & Angela Greulich, 2021. "The education gender gap and the demographic transition in developing countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(2), pages 431-474, April.
    17. Ernesto Dal Bó & Pedro Dal Bó & Jason Snyder, 2009. "Political Dynasties," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 115-142.
    18. Edward L. Glaeser, 2021. "Urban Resilience," NBER Working Papers 29261, National Bureau of Economic Research, Inc.
    19. Shenghao Zhu, 2019. "A Becker–Tomes model with investment risk," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 67(4), pages 951-981, June.
    20. Muhammed Abdul Khalid, 2018. "Climbing the Ladder: Socioeconomic Mobility in Malaysia," Asian Economic Papers, MIT Press, vol. 17(3), pages 1-23, Fall.

    More about this item

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E0 - Macroeconomics and Monetary Economics - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:26143. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.