Income Inequality, Economic Segregation and Children's Educational Attainment

Households became more geographically segregated by income in the United States between 1970 and 1990. Research shows that growing up in a poor neighborhood is associated with worse outcomes for children. This suggests that economic segregation may be harmful to children. Economic inequality also increased between 1970 and 1980. Theoretical arguments suggest that the increase in inequality led to the increase in segregation. Using 1970, 1980 and 1990 Census data, I find that an increase in income inequality at the state level is associated with an increased in economic segregation between census tracts in the state. However, economic inequality between households in the same census tract hardly changed between 1970 and 1990. I then combine Census data with data from the Panel Study of Income Dynamic to show that given a constant level of economic inequality in a state, an increase in economic segregation between tracts in the same state increases affluent children's educational attainment but reduces poor children's educational attainment. Therefore segregation between census tracts increases inequality in educational attainment and may therefore increase inequality in the next generation. Economic inequality within census tracts has little effect on high or low-income children's educational attainment. This paper has been replaced by two of Mayer's other papers: How the Growth in Income Inequality Increased Economic Segregation and How Economic Segregation Affects Children's Educational Attainment