JoonYup Park

We develop a theoretical framework in which segregation, discrimination, and other racialized processes make intergenerational mobility a function of the capital available to one’s broader racial/ethnic group, as in Borjas (1992). We show that racial capital systematically slows the speed of generational convergence for historically unequal groups and that, for any particular racial group, its impact is directly related to the social salience of race in society. We estimate empirical models of intergenerational mobility using data from Opportunity Insights and the NLSY for Asian, Black, Hispanic, and white children born around 1980. Racial capital at the neighborhood and, especially, the metropolitan area levels has a substantial role in explaining Black-white education, income, and employment gaps. It matters about half as much for Hispanic-white differences and very little for Asian-white differences. The inclusion of racial capital in the model sharply closes, and in many cases reverses, the Black-white and Hispanic-white intergenerational mobility gaps documented in Chetty et al. (2020). These results imply that (1) observed racial outcome gaps are largely a function of historical inequities in available capital (more broadly construed here to include neighborhood/metro racial capital in addition to one’s own parents) and (2) racial capital -- and, more fundamentally, the continued social salience of race -- plays a crucial role in explaining the historically slow speed of generational convergence to Black-white equality in the United States. Relative to existing estimates, our results are more suggestive of the eventual convergence to racial equality, albeit at a glacial pace.

In the U.S., Black and white households with identical incomes live in neighborhoods characterized by vastly different economic resources. This racial neighborhood inequality is present in every major metropolitan area and at all points of the income distribution. We document these patterns using neighborhood income as a summary measure of economic resources and highlight where this form of racial inequality is especially severe. We then examine a series of potential explanatory mechanisms for neighborhood inequality, including decentralized racial sorting, housing discrimination, and racial differences in wealth and home ownership. We conclude with a discussion of how the separate and unequal geography of the American housing market contributes to intergenerational mobility and the speed of racial economic convergence in the United States.