The Impact of Racial Segregation on College Attainment in Spatial Equilibrium

RePEc Short ID: pko790
ORCID iD: 0000-0001-8464-2470

Gregory, Victoria; Kozlowski, Julian; Rubinton, Hannah

doi:10.20955/wp.2022.036

Working Paper Revision

The Impact of Racial Segregation on College Attainment in Spatial Equilibrium

Abstract: 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: racial disparities; neighborhood segregation; education; income inequality;

JEL Classification: J15; J24; O18;

https://doi.org/10.20955/wp.2022.036