Income Segregation and Rise of the Knowledge Economy

74 Pages Posted: 22 Jul 2019

See all articles by Enrico Berkes

Enrico Berkes

Ohio State University (OSU) - Department of Economics

Ruben Gaetani

University of Toronto - Rotman School of Management

Date Written: July 19, 2019

Abstract

We analyze the effect of the rise of knowledge-based activities on spatial inequality within U.S. cities. We exploit the network of patent citations to instrument for local trends in innovation. Innovation intensity is responsible for 14% of the overall increase in urban segregation between 1990 and 2010. This effect is mainly driven by the clustering of residents and workers in knowledge-based occupations. We develop and estimate a spatial equilibrium model to quantify the contribution of productivity and residential externalities in explaining the observed patterns. Endogenous amenities account for about half of the overall effect on the sorting of residents.

JEL Classification: O15, O33, R11

Suggested Citation

Berkes, Enrico and Gaetani, Ruben, Income Segregation and Rise of the Knowledge Economy (July 19, 2019). Rotman School of Management Working Paper No. 3423136, Available at SSRN: https://ssrn.com/abstract=3423136 or http://dx.doi.org/10.2139/ssrn.3423136

Enrico Berkes (Contact Author)

Ohio State University (OSU) - Department of Economics ( email )

United States

Ruben Gaetani

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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