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Working Paper Series

The Effects of Residential Segregation during Childhood on Life Chances

Authors

  • Rucker Johnson, Goldman School of Public Policy, University of California, Berkeley

History

  • Goldman School of Public Policy Working Paper (May 2012)

Abstract

Human capital accumulation may depend on the neighborhood in which one grows up through a
variety of channels, including access to school resources, health and social service funding,
neighborhood crime, peer and role model effects, proximity to a chemical dumping ground or
related environmental hazards, and connectedness to job networks and informal sources of
support. This paper provides new causal estimates of the effects of racial residential segregation
during childhood on subsequent adult attainment outcomes. I account for the potential
endogeneity of segregation and neighborhood location choice using instrumental variables based
on 19th Century railroad track configurations, historical migration patterns, political factors, and
topographical features. Following Ananat (2011), it is shown that cities that were subdivided by
railroads into a greater number of physically-defined neighborhoods became significantly more
segregated after the Great Migration of African-Americans to northern and western cities. To
examine the consequences of segregation during childhood, this study analyzes the life
trajectories of children born since 1950 and followed through 2009. Data from the Panel Study
of Income Dynamics (PSID) spanning four decades are linked with information on neighborhood
attributes and school quality resources that prevailed at the time these children were growing up.
Results from 2SLS/IV models demonstrate that, for blacks, the level of racial residential
segregation during childhood negatively impacts subsequent educational attainment, reduces the
likelihood of high school graduation, increases the probability of incarceration, reduces adult
earnings and the likelihood of intergenerational mobility, increases the annual incidence of
poverty in adulthood, and leads to worse health status in adulthood; segregation effects for
whites were not statistically significant across each of these outcomes but the point estimates were
in the opposite direction of the corresponding estimates for blacks. The results are consistent
with prior research that has found that increased segregation leads to more inequality in spending
across districts of the same MSA, thus worsening the relative position of poorer districts.

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