Location Matters: Historical Racial Segregation and Intergenerational Mobility

Abstract

This paper explores historical patterns of racial segregation and its relationship with the observed spatial variation in contemporaneous economic mobility established in Chetty et al. (2014). We combined data from the Equality of Opportunity Project with a novel measure of racial segregation developed in Logan and Parman (forthcoming) and find that past racial segregation explains a significant portion of the spatial variation in intergenerational mobility. These findings are consistent with models showing that persistent institutional factors may drive long-term outcomes across areas. Racial segregation and the environment that fosters it may diminish upward economic mobility by reducing access to networks, labor and capital markets, and political institutions. If so, then reducing the impact of these persistent processes may be key to mitigating current-day gaps in wealth, income, and overall well-being.

Keywords: Intergenerational economic mobility, Historical racial segregation, Economic history

JEL Classification: I3, J62, J1, J15, J68, N3