So Close Yet so Unequal: Spatial Inequality in American Cities

Abstract

Rich income data and a new methodology are employed to investigate patterns and consequences of spatial inequality in American cities over the last 35 years. New Gini-type indices, which assess spatial inequality using individual neighborhoods of variable size as primitives, uncover from the data robust evidence of growing income inequality within the neighborhood. The welfare implications of this trend are investigated through reduced-form models, addressing potential bias due to sorting across and within cities. An exogenous increase of the income mix in the neighborhood is found to yield a significant drop in intergenerational mobility gains for young people.

Keywords: Neighborhood inequality, Gini, individual neighborhood, geostatistics, census, ACS, causal neighborhood effects, life expectancy, divided city, mixed city

JEL Classification: D31, D63, C21, R23, J62, I14