Take the Money and Run: Economic Segregation in U.S. Metropolitan Areas

Abstract

Compared to racial segregation, economic segregation has received little attention in recent empirical literature. Yet a heated debate has arisen concerning Wilson's hypothesis (1987) that increasing economic segregation plays a role in the formation of urban ghettos. This paper presents a methodological critique of the measure of economic segregation used by Massey and Eggers (1990) and finds that it confounds changes in the income distribution with spatial changes. I develop a "pure" measure of economic segregation and present findings on all U.S. metropolitan areas from 1970 to 1990. There have been steady increases in economic segregation for whites, blacks, and Hispanics in both the 1970s and 1980s, but the increases have been particularly large and widespread for blacks and Hispanics in the 1980s. The causes of these changes are explored in a reduced form, fixed-effects model. Social distance theory and structural economic transformations do affect economic segregation, but the large increases in economic segregation among minorities in the 1980s cannot be fully explained within the model. These rapid increases in economic segregation, especially in the context of recent, albeit small, declines in racial segregation, have important implications for urban policy, poverty policy, and the stability of urban communities.