Working Paper: NBER ID: w18933
Authors: Elizabeth Ananat; Shihe Fu; Stephen L. Ross
Abstract: We present evidence that benefits from agglomeration concentrate within race. Cross-sectionally, the black-white wage gap increases by 2.5% for every million-person increase in urban population. Within cities, controlling for unobservable productivity through residential-tract-by-demographic indicators, blacks’ wages respond less than whites’ to surrounding economic activity. Individual wage returns to nearby employment density and human capital rise with the share of same-race workers. Manufacturing firms’ productivity rises with nearby activity only when they match nearby firms racially. Weaker cross-race interpersonal interactions are a plausible mechanism, as blacks in all-white workplaces report less closeness to whites than do even whites in all-nonwhite workplaces.
Keywords: No keywords provided
JEL Codes: J15; J24; J31; R23; R32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| agglomeration economies (R11) | black-white wage gap (J31) |
| employment density (J69) | black-white wage gap (J31) |
| workplace employment density (J29) | black-white wage gap (J31) |
| lower number of same-race peers in workplaces (J79) | wage returns for African Americans (J79) |
| social distance (Z13) | wage returns to agglomeration (J39) |
| higher own-race representation in workplace (J15) | wage returns (J31) |
| residential fixed effects (C23) | unexplained racial differences in wages (J79) |