The Impact of Racial Segregation on College Attainment in Spatial Equilibrium

Victoria Gregory, Julian Kozlowski and Hannah Rubinton

No 77, Opportunity and Inclusive Growth Institute Working Papers from Federal Reserve Bank of Minneapolis

Abstract: This paper seeks to understand the forces that maintain racial segregation and the implications for the Black-White gap in college attainment. We incorporate race into an overlapping-generations spatial-equilibrium model with neighborhood spillovers. The model incorporates race in three ways: (i) a Black-White wage gap, (ii) an amenity externality—households care about the racial composition of their neighbors—and (iii) an additional barrier to moving for Black households. These forces quantitatively account for all of the racial segregation and 80% of the Black-White gap in college attainment in the data for the St. Louis metro area. Counterfactual exercises show that all three forces are quantitatively important. The presence of spillovers and externalities generates multiple equilibria. Although St. Louis is in the segregated equilibrium, there also exists an integrated equilibrium with a lower college gap, and we analyze a transition path between the two.

Keywords: Income inequality; Neighborhood segregation; Education; Racial disparities (search for similar items in EconPapers)
JEL-codes: J15 J24 O18 (search for similar items in EconPapers)
Date: 2023-08-03
New Economics Papers: this item is included in nep-dge and nep-ure
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Working Paper: The Impact of Racial Segregation on College Attainment in Spatial Equilibrium (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmoi:96699

DOI: 10.21034/iwp.77

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