Segregation and Upward Mobility: Evidence from Neighborhood Tipping

Abstract

I estimate the effect of residential segregation on upward mobility using estimated tipping points as instruments for neighborhood racial composition. I find that low-income children who grew up in neighborhoods which experienced white flight and minority in-migration -- forces of segregation -- have substantially lower household incomes as adults. The results indicate that a 10 percentage point increase in neighborhood minority share resulting from segregation reduces the average low-income child's adulthood rank in the household income distribution by four percentiles. This corresponds to a decrease in the adulthood annual household income for the average low-income child of $4,500, or nearly 12 percent. Perhaps surprisingly, growing up in a neighborhood which experiences these segregationary forces is more harmful to the upward mobility of white children than the upward mobility of black children, even though the absolute degree of mobility is higher for whites than for blacks. A potential explanation is that spatial proximity to a racially similar peer group has some mitigating effects for black children who experience segregation.