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- Residential Segregation, Job Proximit:y' and Black Job Opportunities CHRISTOPHER JENCKS AND SUSAN E. MAYER In 1968 John Kain published a seminal paper in which he argued that the high level of joblessness among urban blacks was partly attributable to the fact that a growing fraction of urban jobs-especially blue-collar manufacturing jobs had moved to the suburbs while exclusionary housing practices had kept blacks penned up in central cities. Kain argued that the resulting "spatial mismatch" reduced both employers' willingness to hire black workers and black workers' ability to find jobs that were in principle open to them. In assessing these arguments it is important to draw a sharp distinction between Kain's demand-side and supply-side stories. On the demand side, Kain argued that suburbanization of jobs was likely to reduce employers' willingness to hire black workers because many suburban firms feared that bringing black workers into an all-white suburb would offend white residents. Yet Kain also noted the possibility that residential segregation might benefit blacks, since employers in all-black areas might be more willing to hire blacks than employers in the mixed areas that would come into existence if cities were not segregated. Kain's demand-side analysis of the way residential segregation and the suburbanization of blue-collar employment affected demand for black workers rested on social considerations, many of which appear to have changed since 1968. Perhaps for this reason, subsequent research has seldom tried lo test the validity of Kain's demand-side argument. Yet for those interested in explaining aggregate black employment or earnings, this part of his argument is probably more important than his supply-side argument. . On the supply side, Kain argued that even when suburban employers were willing to hire blacks, the fact that blacks lived farther than whites from 187

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188 INNER-CITY POVERTY IN THE UNITED STATES suburban jobs meant that blacks were less likely to hear about suburban job vacancies before they were filled. In addition, he argued that even when blacks could get suburban jobs, the fact that they had to spend more time and money than whites on commuting was likely to result in lower rates of labor force participation among blacks, who would more often conclude that working was not worth the bother. Unlike Kain's demand-side argument, his analysis of the way distance cut the supply of black workers available to suburban firms was based largely on geographic considerations that have not changed in any fundamental way since 1968. Most blacks still live in the central city, and there are probably even fewer good blue-collar jobs available in the central city today than in the late 1960s. Central-city jobs are increasingly likely to require high levels of education (Kasarda, 1989), and while the educational gap between young black and young white workers has narrowed dramatically, there are still substantial disparities in academic skill.t As a result, many scholars, political leaders, and journalists still view the spatial mismatch hypothesis as a plausible explanation of rising black joblessness.2 This chapter reviews the currently available evidence regarding Kain's major hypotheses. The first section looks at Kain's demand-side arguments, reviewing both the theoretical reasons for thinking that residential segrega- tion might reduce demand for black workers and the empirical evidence for this hypothesis. The second section turns to Kain's supply-side arguments, discussing the effects of living far from major centers of employment on workers' job prospects. The third section reviews evidence on the closely related question of whether black workers who live in the suburbs find better jobs than those who live in the central city. The fourth section com- pares the earnings of central-ci~ blacks who commute to the suburbs to the earnings of similar blacks who work in the central-city ghetto. The clos- ing section discusses the implications of the findings and pressing research needs. We do not take up the question of whether a neighborhood's mean socioeconomic status (SES) affects adult black workers' economic prospects. Wilson (1987) and others have suggested that living in an urban ghetto where few adults have steady jobs may sap an individuals motivation to work In addition, Wilson and others have suggested that living in a neighborhood where nobody has a good job makes it harder to find such a ~ lbe proportion of 25- to 29-year-old nonwhites without a high school diploma fell from 41.6 percent in 1970 to 15.7 percent in 1986. Among whites, the proportion declined from 22.2 to 13.5 percent. The National Assessment of Educational Progress shows that the disparity in test performance between black and white 17-year-olds who were enrolled in school also narrowed after 1970, though not as much as the disparity in years of school completed (National Center for Education Statistics, 1988, Tables 8 and 81-87.) 2 Wilson (1987) and Kasarda (1989) both endorse variants of this hypothesis.

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RESIDENTIAL SEGREGATION AND BLACK JOB OPPORTUNITIES 189 job even if you try. These hypotheses strike us as plausible, but we have not been able to find any empirical studies that assess their validity for adults. The absence of such research reflects the complexity of the problem. An indiv~dual'.s employment status and earnings can correlate with the mean SES of his or her neighborhood for two different reasons. Living in a high-SES neighborhood can increase your chances of finding a good job, but finding a good job can also enable you to move to a high- SES neighborhood. As a result, individuals in low-SES neighborhoods would be less likely to hold steady, well-paid jobs even if their place of residence had no effect whatever on their job prospects. We would need longitudinal data to estimate the contribution of selective migration to the correlation between earnings and community characteristics. No such data were available when we did this review, so there was no way to estimate the effect of a neighborhood's mean SES on adults' job opportunities.3 RESIDENTIAL SEGREGATION AND DEMAND FOR BLACK WORKERS Theoretical Issues Kain argued that a firm's attitude toward hiring black workers was likely to vary with the racial mix of the neighborhood in which it was located. Following economic convention, we refer to such variations in firms' attitudes toward hiring blacks as variations in the demand for black labor. Noneconomists should bear in mind that this usage refers to more than whether firms prefer a black or white worker for a given job. A firm's demand for black labor is highest when it prefers black workers to equally competent white workers, somewhat lower when it is neutral between equally competent blacks and whites, still lower when it prefers whites to equally competent blacks, and lowest of all when it refuses to hire blacks at all. A firm can express its demand for black or white workers in several ways. Firms that prefer white to black workers must set wages high enough to attract white workers, and they must then devise plausible criteria for hiring white rather than black applicants. ~ minimize the cost of preferring whites, these firms are also likely to locate where white workers are relatively cheap and black workers are relatively scarce. Firms that prefer white workers therefore tend to locate either in white rural areas or on the fringes of major metropolitan areas. Firms with a weaker preference 3Because of increased interest in neighborhood effects, the Panel Study of Income Dynamics has been adding data to its files on the characteristics of the census tracts in which respondents lived.

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190 INNER-C~ BERM IN THE UNFED STATES for white workers are more likely to locate in the central city, where a large pool of cheap black labor is readily available. Kain did not discuss the effect of firms' racial preferences on their location decisions. Instead, he assumed that location decisions were exoge- nous and discussed their effect on a firm's demand for black workers. He argued that since local whites might resent the firm's bringing black workers into their all-white neighborhood, firms in such neighborhoods would try to avoid hiring blacks. Kain was mainly concerned with black workers' access to manufacturing jobs. The argument that manufacturing firms in white areas would avoid hiring blacks to avoid local resentment does not strike us as very plausible. Blue-collar workers who commute to large suburban manufacturing plants typically drive to the plant's parking lot, go to their job, put in their time, go back to the parking lot, and drive home. They are unlikely to have much contact with the community in which they work especially if they are black and the community is entirely white. Local resentment is therefore likely to be minimal. Furthermore, suburban whites who do resent the fact that a local plant hires blacks have few effective mechanisms for expressing their displeasure unless they resort to violence, which is rare. (Whites who work in a plant have many effective ways of expressing racial resentment, but they can do this no matter where the plant is located.) Kain's argument seems more plausible when applied to the service sector than when applied to manufacturing, and it seems especially plausible when applied to small firms that deal directly with the public. It is easy to imagine suburban restaurants, grocery stores, gas stations, dry cleaners, and repair services refusing to hire blacks because they think their customers prefer dealing with whites and will take their trade elsewhere if the firm does not cater to their prejudices. Kain did not discuss the likely behavior of firms in racially mixed areas. His arguments imply, however, that manufacturing firms in mixed areas would be indifferent between equally competent black and white workers, since they would not be worried about bringing blacks into mixed areas. The picture is more complicated for retail firms. If both blacks and whites preferred doing business with retail firms that hired people of their own race, and if blacks and whites who lived in mixed neighborhoods had roughly equal incomes, retail firms in mixed areas would presumably try to hire a mix of employees similar to the mix of local residents. If whites were quite averse to firms that hired blacks while blacks were not so averse to firms that hired only whites, or if whites had far more money than blacks, most retail firms in mixed areas might end up discriminating against blacks. Finally, Kain noted that firms in all-black areas might hire more blacks than an average firm. This could occur for two reasons. First, ghetto firms

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RESIDENTIAL SEGREGATION AND BLACK JOB OPPORlUNITIES 191 would hire disproportionate numbers of blacks if white workers were un- willing to work in the ghetto or demanded "combat pay" for working there.4 Second, retail firms in the ghetto would hire disproportionate numbers of blacks if black customers preferred dealing with blacks. If these general hypotheses are correct, the persistence of all-black neighborhoods can either increase or decrease aggregate demand for black workers. The net effect of a residential ghetto on demand for black workers will depend on whether the increase in demand within the ghetto offsets the decline elsewhere. The balance between the gains in black employment within the ghetto and the losses elsewhere should depend on two factors: the absolute number of jobs inside and outside the ghetto, and the relative strength of ghetto firms' preference for blacks compared to nonghetto firms' preference for whites. All the factors that influence the costs and benefits of residential segregation are likely to have changed over the past 30 years. Thus even if we were to accept Kain's claim that residential segregation reduced aggregate demand for black workers in Chicago and Detroit in the l950s, we could not assume segregation had the same effect today. The effects of residential segregation are also likely to vary from one part of the country to another. Finding that residential segregation lowers demand for black workers in Chicago and Detroit may not, therefore, imply that it has the same effect in California. Finally, residential segregation is likely to have different effects on different ethnic groups. Thus even if we found that Chinese immigrants did better when they moved to highly segregated cities, the same might not hold for Mexican immigrants, much less for blacks. Empirical Evidence Kain's analysis of Chicago and Detroit employment patterns in the l950s convinced him that blacks would have gotten a larger share of all jobs if there were no ghetto, but this was not because his model implied that residential desegregation would increase demand for black workers. Kain's model implied that residential desegregation would have no effect whatever on overall demand for black workers. Residential desegregation increased black employment only because it brought black workers closer to most jobs and thereby increased the supply of black workers available to fill these jobs at any given wage. 4A downward shift in the local supply of white worked does not necessarily lead to an upward shift in local demand for black worked. When the local supply of white worked available at a given price falls, firms may move elsewhere rather than hiring more blacks. We return to this point below.

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192 INNER-CITY POVERTY IN THE UNITED STATES Kain used the proportion of nonwhites in a neighborhood (R) as a proxy for demand and used the number of miles from a neighborhood to the edge of a city's major ghetto (dm) as a proxy for supply. He assumed that both these measures had linear effects on blacks' share of neighborhood employment. Using these two measures to predict nonwhites' share of total employment (W1 in a Chicago neighborhood in 1956, Kain's best estimate was that: W = 9.28 + .456R-.409dm (1) Since this model assumes that the effects of R and Dm are linear, it implies that the fraction of all Chicago-area jobs held by blacks (W) depends entirely on the areawide means of R and dm. The dispersion of R (an indicator of the level of segregation) is irrelevant. Segregation will, of course, increase demand for black workers in black neighborhoods and lower demand in white neighborhoods, but the two changes will exactly offset one another, leaving aggregate demand unchanged. Since residential desegregation does not alter the total number of blacks or whites, at least in the short run, it does not change the overall mean of R. Using Kain's assumptions, therefore, residential segregation only affects blacks' share of total employment indirectly, that is, by affecting their average proximity to jobs (d ). While Kain implicitly assumed that desegregation would leave overall demand for black workers unchanged, he did not try to test this assumption. In order to do so we need to ask whether, when all else is equal, demand for black workers in neighborhoods whose racial mix mirrors that of the metropolitan area as a whole is higher or lower than demand in the metropolitan area as a whole. So far as we can discover, only one study has investigated this issue. Offner and Saks (1971) reanalyzed Kain's Chicago data and found that blacks fared quite badly in racially mixed areas. Employers in all-black neighborhoods hired a lot of blacks. Employers in all-white areas hired very few blacks. Employers in racially mixed areas acted like employers in all- white areas, hiring very few blacks. As a result, blacks' share of employment was lower in racially mixed neighborhoods than in the Chicago area as a whole. Offner and Saks's statistical results cannot tell us why employers in mixed neighborhoods hired so few blacks, but several possible explanations come to mind. If white Chicago residents were reluctant to trade with firms that hired blacks in the 1950s, while Chicago blacks were willing to trade with firms that hired only whites, blacks would not have gotten many retail jobs in racially mixed areas. And if white workers were willing to work in racially mixed areas for the same wages as in all-white areas in the 1950s,

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RESIDENTIAL SEGREGATION AND BLACK JOB OPPORTUNITIES 193 firms in racially mixed areas would have had no more incentive to hire blacks than firms in all-white areas. These conjectures all assume that a firm's employment practices de- pend on the racial mix of its neighborhood. In the racially mixed Chicago neighborhoods with which we are familiar, however, residential mix is a by-product of local employment patterns, as well as the other way round. The areas around the University of Chicago and Michael Reese Hospital, for example, were located in the path of black residential growth. Ordinar- ily, these areas would have become entirely black. They remained racially mixed because firms employing white professionals remained in the area, and many of these white workers wanted to live near their workplace. Whatever the explanation, Offner and Saks's results show that if resi- dential desegregation had led all Chicago firms to act like those in racially mixed neighborhoods, job opportunities for blacks would have contracted, not expanded. Luring blacks and whites to the same neighborhoods would have reduced blacks' chances of getting jobs in what had once been ghetto firms without opening up an equivalent number of new jobs in firms outside the old ghetto. In the long run, of course, residential desegregation might have re- duced white prejudice against blacks, increasing demand for black workers. One way to test the validity of this hypothesis is to ask whether blacks do better economically In relatively desegregated cities. The evidence on this point, while hardly conclusive, suggests that residential segregation has very little effect on blacks' economic success. Masters (1974) studied the ratio of nonwhite to white earnings in 65 large Standard Metropolitan Statistical Areas (SMSAs) in 1959. Contrary to what we would expect if residential segregation reduced demand for nonwhite workers, the ratio of nonwhite to white incomes was slightly higher in highly segregated SMSAs. This relationship was not reliably different from zero, but the fact remains that Masters's findings offer no support for the contention that desegregation increases demand for black workers.5 Masters (1975) replicated this result using 1969 data from 77 SMSAs with large black populations. Unfortunately, Masters's 1969 results changed when he excluded SMSAs with substantial amounts of agricultural employment. Once he dropped these SMSAs, there was some evidence that both black men's chances of having a job and their relative earnings were 5Kain (1974) argues that Masters's results are inconclusive, since they do not take account of city-to-city differences in the degree to which jobs are suburbanized, the relative tightness of ur- ban and suburban labor markets, or the distance from the black ghetto to centers of employment. But Kain offers neither theoretical arguments nor empirical evidence that including these omit- ted variables would make the coefficients of Masters's segregation measures negative instead of positive.

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194 INNER-C1IY POVERTY IN THE UNITED STATES more favorable in less segregated SMSAs.6 Thus we cannot say with any confidence whether residential segregation raised or lowered demand for black workers in the 1960s. Nor can we rule out the possibility that the level of residential segregation depended on the relative earnings of blacks and whites rather than the other way round. A]1 we can say with confidence is that the relationship between residential segregation and relative earnings is weak. In any event, the effects of residential segregation on a firm's demand for black workers are likely to change over time. Kain's data described Chicago in the 1950s, when employers were under no legal or social pressure to hire blacks and when hiring blacks for nonmenial jobs often caused firms a lot of trouble. Masters's data describe the world of 1959 and 1969, before affirmative action programs had much impact. Much has changed since then, both outside and inside the ghetto. Outside the ghetto, white customers, appear to have become more confortable seeing blacks in nontraditional roles. Political and social pres- sures have led many managers, especially in large firms, to open up new kinds of jobs to blacks and to make more aggressive recruiting efforts. All these efforts have, however, focused largely on blacks who act more or less like whites. At the same time, some black workers have become more assertive in their dealings with whites, increasing employers' fears that blacks will cause "trouble." The net effect of these trends on demand for black workers Is not obv~ous.7 6 Masters presents bivariate results for 77 SMSAs and multivariate results for 65 of these SMSAs. The 12 excluded SMSAs had high levels of agricultural employment in their more remote sub- urbs and low black-white income ratios. Almost all coefficients change sign in his multivanate model, so trimming the sample makes a big difference. Unfortunately, he presents no bivanate results for the trimmed sample, and his multivariate results include four separate measures of residential segregation, along with two control variables designed to measure job dispersion and accessibility. With these controls, the Taeubem' measure of residential segregation raised blacks' income relative to whites (t = 2.4) but lowered blacks' relative likelihood of having a job (t = .6~. The multivariate model is hard to interpret, however, because Masters's measure of central- city blacks' access to suburban jobs (A) is (JgClJgt)/(JNgc/JNgt)' where JB is the number of jobs held lay blacks in a given area, JNB is the number of jobs held lay nonblacks, the subscript c denotes jobs in the central city, and the subscript t denotes all jobs in the SMSA. Unfortunately, this ratio measures not only the relative accessibility of suburban jobs to blacks and whites but the relative willingness of suburban employers to hire blacks rather than whites ("demand"~. Kain's argument implies that A is at least partly endogenous and should not be controlled when estimat- ing the effects of residential segregation. The use of four different segregation measures, which may well be quite collinear, also makes Mastem's results hard to interpret. Bivariate statistics for the trimmed sample would have made his findings more instinctive. 7Kirschenman and Neckerman (forthcoming) describe a survey of Chicago employers that shows very high levels of prejudice against unskilled black males, but they do not relate these attitudes to the actual numbers of blacks hired in a given firm.

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RESIDENTIAL SEGREGATION AND BLACK JOB OPPORTUNITIES 195 Predicting changes in demand for black workers inside the ghetto is as hard as predicting changes outside the ghetto. Black ghetto residents may have grown less willing to patronize firms that hire only whites, but we know of no evidence on this point. The wage premium that whites demand for working in the ghetto has probably risen since 1969, because crime has increased even more in the ghetto than elsewhere,8 but again, we know of no hard evidence on this point. If whites do, in fact, demand higher premiums for working in the ghetto, this is likely to have had two contradictory effects on job opportu- nities for blacks. On the one hand, we would expect firms that remained In the ghetto to have substituted cheap black workers for more expensive white workers. On the other hand, we would expect firms that wanted to retain significant numbers of whites to have left the ghetto. Ken together, these trends would lead to an increase In the fraction of ghetto jobs going to blacks, combined with a decrease in the fraction of all jobs located in ghetto areas.9 Again, the net effect on the number of jobs available to blacks in the ghetto is not obvious. The only data we have found that speak to this issue come from Leonard's (1987) study of Chicago and Los Angeles firms' payrolls in 1974 and 1980.~ Leonard's data do not, of course, measure changes In firms' demand for black workers. Rather, they measure changes In the actual level of black employment inside and outside the ghetto. Such changes depend on the supply of black and white workers available to different sorts of firms as well as on firms' demand for such workers. Leonard's data suggest that blacks' share of blue-collar jobs In the ghetto Increased slightly in both Chicago and Los Angeles between 1974 and 1980, which Is what we would expect if whites were less willing to work In the ghetto. Blacks' share of blue-collar jobs outside the ghetto rose In Q Thepercentage increase in crime since the mid-1960s has been greater among whites than among blacks, but the absolute increase has been greater among blacks than among whites. From the viewpoint of the potential victim, it is the absolute increase that matters, so the wage premium required to lure people to all-black areas is likely to have risen. 9 Most ghettos occupy a larger fraction of the metropolitan area in which they are located today than they did in 1960. As a result, the fraction of all jobs located in the ghetto has often grown, even when the number of jobs per square block has fallen. For analytic purposes, however, the crucial issue is not the fraction of all jobs located in the ghetto but the ratio of this fraction to the fraction of all persons living in the ghetto. The argument in the text reflects conventional wisdom in assuming that this ratio has fallen, but we have not seen any hard data supporting that view. iLeonard's sample covem 1,911 Chicago firms and 2,389 Los Angeles firms surveyed by the Of- fice of Federal Contract Compliance in both 1974 and 1980. Since the sample excludes firms that came into existence or went out of existence between 1974 and 1980, it is not fully representative of all firms surveyed in either year. Nor are firms surveyed by the OFCC fully representative of all firms.

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196 INNER-CI-IY POVERTY IN THE UNllED STATES Los Angeles but fell in Chicago. As a result, the jobs held by black male Chicagoans were more likely to be in the ghetto in 1980 than in 1974, even though ghetto firms accounted for a smaller fraction of all Chicago-area jobs. In Los Angeles, in contrast, the jobs held by black men were less likely to be in the ghetto in 1980 than in 1974, even though ghetto firms were growing faster than those in mixed areas. The difference between Chicago and Los Angeles may well reflect differences in the two cities' racial climates, which in turn affect firms' location decisions. The main conclusion we draw from Leonard's findings is that generalizing from a single city to the nation as a whole would be very dangerous. Taking all the evidence together, the effect of residential segregation on firms' overall demand for black workers remains almost as uncertain as it was 20 years ago. If we rely on Masters's findings for 1959 and 1969, the safest conclusion would be that at that time residential segregation had no consistent effect on firms' interest in hiring blacks. It is important to emphasize, however, that Masters' findings reflect the combined effects of supply and demand, and that they describe employment patterns 20 to 30 years ago, not today. It is also important to emphasize that we know nothing whatever about how residential segregation along economic lines affects demand for black workers. EFFECTS OF JOB PROXIMITY ON LABOR SUPPLY Kain showed that as a neighborhood's distance from the central-city ghetto increased the proportion of neighborhood jobs held by nonwhites declined. This was true even with the neighborhood's own racial mix controlled (see equation 1, above), and it was true in Detroit as well as in Chicago. Leonard (1987) found the same pattern for Chicago and Los Angeles in 1974 and 1980. Kain argued that distance from the central-city ghetto affected the racial mix of a neighborhood's labor force by affecting the supply of black workers available to firms in different neighborhoods. Distance affected labor supply in two ways. First, it increased the effort prospective workers had to make in order to learn about jobs before they were filled. Sec- ond, distance raised workers' commuting costs, making remote jobs less attractive. The argument that information and commuting costs encourage pro- spective workers to choose jobs near where they live is not controversial. The controversial part of Kain's supply-side argument was his suggestion that workers who could not find jobs near home were likely to stop looking and withdraw from the labor force. If this were true, the high rate of joblessness among urban blacks could be reduced either by discouraging the

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RESIDENTIAL SEGREGATION AND BLACK JOB OPPORTUNITIES 197 movement of jobs from the central city to remote suburbs or by encouraging black residential movement from the central city to the suburbs. 1b test this part of Kain's argument, we need to investigate two questions: 1. Do blacks fare better economically when they live in neighbor- hoods that are near a lot of blue-collar jobs? 2. Do blacks fare better when they live in metropolitan areas where blue-collar jobs are still mainly located in the central city rather than in the suburbs? We take up these questions in turn. Neighborhood Comparisons One way to estimate the effect of job proximity on black employment is to measure how far different neighborhoods are from blue-collar jobs and then ask whether blacks who live in neighborhoods with a lot of nearby blue-collar jobs have unusually high rates of employment. In the 1950s, for example, Chicago blacks were concentrated in two areas: the West Side, which was a major center of manufacturing and warehousing, and the South Side, which had relatively few jobs of this kind. One way of testing Kain's arguments about the importance of job proximity would have been to ask whether blacks on the West Side were more likely to have jobs than blacks on the South Side. This strategy runs an obvious risk, since employment influences residential choices as well as the other way round. If Chicago's West Side firms had hired blacks in large numbers, many blacks who worked for these firms would presumably have moved to the West Side, even if they had lived on the South Side when they got their jobs. If West Side firms had paid blacks better or offered them steadier employment than other Chicago firms, as Kain's argument implied they should, West Side blacks would have had higher rates of employment and higher wages than other Chicago blacks. This would not have proved that living on the West Side helped blacks get good jobs. It would only have proved that blacks, like everyone else, prefer a short trip to wore If we set aside this methodological hazard for the moment, it is still important to ask whether a neighborhood's proximity to various kinds of jobs is positively correlated with the fraction of adult residents who hold jobs or negatively correlated with its unemployment rate. Two studies have correlated job proximity with employment among adult males. Hutchinson (1974) used a Pittsburgh traffic survey to construct an index of the number of jobs located at various distances from each respondent's home. He measured the distance between homes and jobs by estimating the time required to reach the job by public transportation. His index of job proximity had a modest positive effect on the probability that white males

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212 INNER-CITY POVERTY IN THE UNITED STATES using 1/1,000 census samples for 1960, 1970, and 1980. Ibble 5-3 summarizes the results. Like Harrison, we find no significant difference in weekly earnings between central-cit~, and suburban blacks in either 1959 or 1969 once we control education.24 By 1979, however, black males who had not attended college were earning appreciably more if they lived in suburbs rather than central cities. Table 5-3 is thus consistent with the view that by 1979 unskilled and semiskilled blacks could find better jobs if they lived in suburbs than if they lived in central cities. But it is also consistent with the view that highly paid blacks became more inclined to move to the suburbs after 1970. Price and Mills (1985) tell a similar story using data from the May 1978 Current Population Survey. They estimated the effect of suburban residence on the earnings of 25- to 59-year-old full-time, year-round workers. With both education and occupation controlled, black males earned 6 percent more if they lived in suburbs rather than central cities, while white males earned 8 percent more.25 Vrooman and Greenfield (1980) also estimated the effect of suburban residence on black men and women's earnings in the early 1970s, but their sample is so small and unrepresentative that we cannot put much weight on their findings.26 24Table 5-3 shows no difference in weekly earnings between central-city and suburban blacks in either 1959 or 1969, even when we do not control education. Table 5-1, in contrast, suggests that regularly employed suburban blacks earned about 10 percent more than central-city blacks in large SMSAs in 1969. We do not know whether the inconsistencies between the two tables are due to differences in geographic coverage, differences in age coverage, or the inclusion of men who did not work full-time, year-round, in Table 5-3. 25The small size of Price and Mills's black sample raises troubling questions about its represen- tativeness. They took their data from the May 1978 CPS. At that time the CPS sampled roughly 0.7 percent of all households. The Bureau of the Census (1980) indicates that Z3 million black men between the ages of 25 and 54 worked full-time, year-round in 1978, so the May CPS should have included at least 1,600 such men. Yet after excluding men who provided less than half their family's total income, Price and Mills ended up with a sample of only 500 such men. Dropping men whose earnings constituted less than half their family's total income could hardly have elim- inated 70 percent of all black men who worked full-time, year-round. Something else must be going on here, but we cannot say what. Because the sample is small, the sampling error of the 6.0 percent difference between urban and suburban blacks is 3.6 percent. The 95 percent confidence interval for the difference therefore ranges from a 13.2 percent advantage for suburbanites to a 1.2 percent advantage for central-city residents. 26Vrooman and Greenfield used a sample surveyed by the Opinion Research Corporation that included 293 blacks. Almost two-fifths of the black sample lived in suburban areas, which is considerably higher than we would expect on the basis of CPS data. Suburban black males earned 74 percent more than inner-city black males, while suburban black females earned 55 percent more than inner-city black females. No census or CPS survey reports urban-suburban differences of this magnitude. We therefore suspect that the Opinion Research Corporation's sampling frame was unrepresentative for some reason. Assessing Vrooman and Greenfield's results is also complicated by their obscure presentation and by arithmetic errors discussed in Reid (1984~.

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RESIDENTIAL SEGREGATION AND BLACK JOB OPPORTUNITIES 213 Almost all these comparisons between central-city and suburban blacks support two broad empirical conclusions: 1. In the 1960s, central-city blacks did no better economically than comparable suburban blacks. 2. Since 1970 the economic gap between central-city and suburban blacks has grown appreciably.27 These facts are compatible with two very different hypotheses: 1. The spatial mismatch between black job opportunities and black housing options that Kain described in 1968, while exaggerated at that time, has become quite important since then. Because social conditions in black central-city neighborhoods de- teriorated dramatically between 1965 and 1975, black migration between central cities and suburbs became far more selective than it had previously been. We cannot choose between these two explanations without new data on selective migration. Comparing the studies of blacks who live in the suburbs with the studies of blacks who work in the suburbs, discussed in the previous section, also raises an important puzzle. Both Straszheim and Danziger and Weinstein found that black ghetto residents earned slightly more if they worked in the suburbs rather than the central city in 1965-1970. Yet Bell, Harrison, and our Able 5-3 all indicate that blacks who lived in the suburbs in 1965-1970 ., earned no more than blacks with the same amount of schooling who lived in central cities. The difference between the two kinds of studies may be due to the fact that they cover different cities or different kinds of workers. But the difference may also mean that living in the suburbs is not strongly associated with working in the suburbs. This same paradox arises in opposite form in 1980. Most of the evidence we have examined suggests that by 1980 blacks who lived in suburbs earned more per week than blacks with the same amount of education who lived in central cities. Yet Hughes and Madden found that, with all else equal, Cleveland, Detroit, and Philadelphia blacks who worked regularly in 1980 earned no more when they worked far from the center of their SMSA than when they worked near its center. Once again, we need simple descriptive data showing where blacks who live in different parts of an SMSA work, and how much they earn, in order to reconcile these superficially contradictory findings. If we were to find that blacks could earn more by living in the suburbs, we would also have to ask why so many of them continue to live in central 27The main apparent exception to this generalization is the data on earnings among full-time, year-round, nonwhite male workers in large metropolitan areas, shown in Table 5-1.

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216 INNER-CITY POVERTY IN THE UNITED STATES cities. The conventional answer is that blacks cannot buy housing in all- white suburbs, or that they do not feel comfortable in such suburbs. Racial discrimination is certainly a real problem, both in the housing market and in the social lives of black suburbanites. But for our purposes the question is not why so few blacks live in white suburbs but why so few live in black suburbs and black neighborhoods of racially mixed suburbs. If job opportunities are better for blacks who live in black suburbs, blacks should keep moving to these suburbs until local demand for black workers is saturated and the suburban wage advantage disappears. Whites have, of course, resisted the growth of black suburban neigh- borhoods. But they have also resisted the growth of black urban neigh- borhoods. Our question is therefore comparative: Has white resistance to black residential growth been more effective in the suburbs than in the central cities and, if so, why? The easiest way to answer this question is to investigate whether the supply of black suburban housing has kept pace with demand. If it has not, the price differential between housing in black central-city and black suburban neighborhoods should be greater than the price differential between comparable housing units in white central- cib and suburban neighborhoods. The price of housing in black suburbs should also have increased faster over the past 20 years than the price of comparable housing in black central-city neighborhoods. We have not reviewed the literature on housing prices, but our informal inquiries uncovered no work on trends in the relative price of housing in urban versus suburban black neighborhoods.28 Unless the price of black suburban housing has risen faster than the price of comparable housing in other areas, it is hard to argue that discrimination has discouraged blacks from moving to black suburban areas although one can certainly argue that discrimination has discouraged blacks from moving to white areas. If discrimination has not discouraged black movement to the suburbs, the basic premise of the spatial mismatch hypothesis needs to be reexamined. 28Using a 1/1,000 sample of census records, we found that among whites gross rent (i.e., rent plus heat and utilities) in the suburbs exceeded gross rent in the central city by 9 percent in 1960, 10 percent in 1970, and 11 percent in 1980. Among blacks, gross rent averaged 20 percent less in the suburbs than in the central city in 1960, 4 percent more in 1970, and 21 percent more in 1980. If the figures for blacks covered the same housing units in all three Yeats, they would provide strong support for the hypothesis that demand for suburban housing rose faster than supply during this period. In fact, however, the housing stock rented by blacks in 1980 was much larger and of much higher quality than that rented by blacks in 1960. Much of the apparent increase in relative prices may, therefore, reflect improvement in housing quality rather than increased demand for suburban locations. A convincing analysis of this issue would have to compare price trends in specific black, white, and mixed neighborhoods throughout this period. A study of land values in black and white areas would also be instructive.

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RESIDENTIAL SEGREGATION AND BLACK JOB OPPORTUNITIES WHERE DO WE GO FROM HERE? We began with four questions: 217 How does residential segregation affect demand for black workers? How does proximity to work affect the supply of black workers available for employment? Can black central-city residents earn more by commuting to the suburbs? Can black central-city residents earn more if they live in the sub- urbs? Our tentative answers to these questions are as follows. Demand for Black Workers Residential segregation is likely to reduce demand for black workers in white areas and increase demand for black workers in black areas. Whether the net result is to increase or decrease aggregate demand for black workers depends on a number of factors: how strongly whites dislike working in black areas, how strongly blacks dislike working in white areas, whether black customers prefer trading with firms that discriminate in favor of black workers, whether white customers prefer trading with firms that discriminate in favor of white workers, whether firms that mainly hire blacks are more or less productive than firms that mainly hire whites, and hence whether firms prefer hiring relatively cheap labor in the ghetto or more expensive labor in white areas. All these factors are likely to change over time. They also vary from place to place. As a result, we cannot predict the economic consequences of residential segregation by using deductive logic. When we turn from theory to evidence, we find that the level of residential segregation in a metropolitan area had very little effect on income differences between black and white men in either 1959 or 1969. No one has investigated changes since 1969. Nor has anyone studied the effect of residential segregation on the earnings of black women or black teenagers. Based on what we now know, it is hard to draw any strong conclusions about how residential segregation currently affects demand for black workers. All we can say is that it did not appear to have much impact in 1959 or 1969. Job Proximity and Labor Supply The supply of black workers available to a firm at any given wage rate clearly diminishes as distance from black residential areas increases. But it does not follow that moving black workers closer to major centers of

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218 INNER-CITY POVE~IY IN THE UNITED STATES employment would increase the number of blacks taking jobs at any given wage rate. Comparisons among Pittsburgh and Los Angeles neighborhoods sug- gest that job proximity has little impact on black men's chances of holding a job. Distance does have an effect on black teenagers' chances of working in Philadelphia, Los Angeles, and Chicago, however, and in the best cur- rently available study distance explains 30 to 50 percent of the racial gap in teenage employment rates. While job proximity does not appear very important for adults in Pittsburgh or Los Angeles, blacks do seem to have done better economically in both 1960 and 1980 when they lived in SMSAs where manufacturing, trade, and service jobs were concentrated in the central city rather than in the suburbs. Suburban Versus Central-City Wages In 1965-1970, ghetto blacks who worked in the suburbs of Cleveland, Detroit, St. Louis, and San Francisco earned about 10 percent more than those who worked in the ghetto. This wage premium was roughly sufficient to cover the extra cost of commuting to the suburbs. In 1980, however, Hughes and Madden found that the overall wage level for all black workers was no higher near the periphery of the Cleveland and Philadelphia SMSAs than near the center, and it was slightly lower near the periphery of the Detroit SMSA The most likely explanation of this apparent contradiction is that for blacks suburban wages were roughly equal to central-city wages in both 1970 and 1980, but that inner-city black workers only commute to the suburbs if they happen to find a job that pays more than they think they could earn nearer home. Blacks Who Live in the Suburbs We found no evidence that suburban blacks fared better than compa- rable central-city blacks in 1966-1970, when Kain first advanced the spatial isolation hypothesis. Since 1970, however, joblessness has risen faster among central-city blacks than among suburban blacks. We do not know whether this was because of selective migration or because demand for black workers fell more in central cities than in the suburbs. Policy Implications Taken together, these findings tell a very mixed story. They provide no direct support for the hypothesis that residential segregation affects the aggregate level of demand for black workers. They provide some support

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RESIDENTIAL SEGREGATION AND BLACK JOB OPPORTUNITIES 219 for the idea that job proximity increases the supply of black workers, but the support is so mixed that no prudent policy analyst should rely on it. Those who argue that moving blacks to the suburbs would improve their job prospects, or that improving public transportation to the suburbs would reduce unemployment in the central-city ghetto, must recognize that there is as much evidence against such claims as for them. Future Research Because of its intuitive appeal, the spatial mismatch hypothesis is unlikely to go away, no matter what the evidence shows. When the evidence is mixed, as it is now, those who find the theory appealing will continue to defend it, and policymakers who find it appealing will continue to listen. Under these circumstances we ought to make a serious effort to improve the quality of the available evidence. Four steps seem especially pressing. First, since theory suggests that the effects of living in the central-city ghetto are likely to have changed over time, since the available descriptive statistics also point to such changes, and since much of the most widely cited evidence in this debate is now more than 20 years old, we need to use the census, the CPS, and the PSID to assemble time series comparing: blacks who live in suburbs to blacks who live in central cities; blacks who work in suburbs to blacks who work in central cities; blacks who live in very large cities, where the spatial mismatch hypothesis seems likely to have its strongest effect, to blacks who live in smaller cities, where travel time to suburban jobs is likely to be modest; blacks who live in cities where most blue-collar jobs are far from the central-city ghetto to blacks who live in cities where most blue-collar jobs are close to the central-city ghetto; and blacks who live in highly segregated SMSAs to blacks who live in less segregated SMSAs. All these tabulations should be broken down by sex, educational level, and age. Having descriptive material of this kind readily available in a Census Bureau publication would do more than almost any piece of primary research to raise the level of both public understanding and scholarly argument about these issues. Second, we need more fine-grained descriptions of specific cities, in- cluding maps that show where workers with specified characteristics earn the most and the least, which neighborhoods have major centers of blue- collar employment, and which neighborhoods have the highest and lowest rates of labor force participation. This is a field where a picture is worth considerably more than a thousand words.

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220 INNER-CITY POVERTY IN THE UNITED STATES Third, we need to look more carefully at the effects of changes over time in cities' residential and employment patterns. Cross-sectional com- parisons among SMSAs can sometimes be instructive, but they have severe limitations. If any one city pursues policies that benefit blacks, its reward will be to attract new black migrants, whose presence will drive up black unemployment and drive down black wages. This means that no city can expect to keep demand for black labor much tighter than the national average for a protracted period (e.g., more than 20 years). It follows that if we want to estimate the erects of naiwnal policies aimed at keeping manufacturing near the central-city ghetto or at helping central-city blacks move to the suburbs, city-to-city comparisons may lead us badly astray, seriously underestimating the benefits of the policies in question. In order to do better, we need dynamic models that take account of intercity as well as intracity migration. Fourth, and perhaps most important, we need to investigate the deter- minants of residential movements between central cities and suburbs. We then need to estimate the contribution of selective migration to employ- ment and earning differences between central~ity and suburban blacks. Social scientists' collective failure to take account of selective migration is probably the single most important reason why we have learned so little about this subject in the two decades since Kain first advanced the spatial mismatch hypothesis. ACKNOWLEDGMENTS We are indebted to Bennett Harrison, Harry Holzer, Jonathan Leonard, and Michael Wiseman for comments on earlier drafts of this chapter. The Center for Urban Affairs and Policy Research at Northwestern University provided financial assistance. REFERENCES Bell, Duran, Jr. 1974 Residential location, economic performance, and public employment. Pp. 55- 75 in Patterns of Racial Discrunination, Vol. 1, George M. Von Furstenberg, Bennett Harrison, and Ann R. Horowitz, eds. Lexington, Mass.: Lexington Books. Bureau of the Census 1%9 Income in 1967 of Persons in the United States. Current Population Reports, Series P 60, No. 60. Washington, D.C.: U.S. Department of Commerce. Money Income of Families and Persons in the United States: 1978. Current Population Reports, Series P 60, No. 123. Washington, D.C.: U.S. Department of Commerce. 1983 Financial Characteristics of the Housing Inventory for the United States and Regions: 1983. Annual Housing Survey: 1983, Part C. Current Housing Reports, Series H-150-83. Washington, D.C: U.S. Department of Commerce. 1gS0

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RESIDENTIAL SEGREGATION AND BLACK JOB OPPORTUNITIES 1988 221 Money Income of Families and Persons in the United States: 1986. Current Population Reports, Series P 60, No. 159. Washington, D.C.: U.S. Department of Commerce. Byrne, James J. 1975 Occupational mobility of workers. Special Labor Force Report, No. 176. Washington, D.C.: Bureau of Labor Statistics. Danziger, Sheldon, and Michael Weinstein 1976 Employment location and wage rates of poverty-area residents. Joumal of Urban Economics 3:127-145. Ellwood, David ~ 1986 The spatial mismatch hypothesis. Are there teen-age jobs missing in the ghetto? Pp. 147-190 in We Black Youth Emp~rnent Crisis, Richard B. Freeman and Harry J. Holzer, eds. Chicago: University of Chicago Press. Barley, John E. 1987 Disproportionate black and Hispanic unemployment in US metropolitan areas. American Journal of Economics and Sociology' 46:129-150. Harrison, Bennett 1972 The intrametropolitan distribution of minority economic welfare. Joumal of Regional Science 12:23~3. Discrimination in space: Suburbanization and black unemployment in cities. Pp. 21-53 in Patterns of Racial Discrimination, Vol. 1, George M. Von Gutenberg, Bennett Harrison, and Ann R. Horowitz, eds. ~ "ington, Mass.: Lexington Books. Hughes, Mark Alan 1987 Moving up and moving out: Confusing ends and means about ghetto dispersal. Urban Studies 24:50~517. Hughes, Mark Alan, and Janice Fanning Madden Forth- Residential segregation and the economic status of black workers: New coming evidence for an old debate. Joumal of Urban Economics. Hutchinson, Peter M. 1g74 1be effects of accessibility and segregation on the employment of the urban poor. Pp. 77-96 in Pattems of Racial Discrimination, Vol. 1, George M. Von Gutenberg, Bennett Harrison, and Ann R. Horowitz, eds. Lexington, Mass.: Lexington Books. Ihlanfeldt, Keith R. 1988 Intra-metropolitan variation in earnings and labor market discrimination: An economic analysis of the Atlanta labor market. Southern Economic Joumal 55:123-140. Ihlanfeldt, Keith R., and David L Sjoquist 1989 The impact of pb decentralization on the economic welfare of central city blacks. Journal of Urban Economics 26:110-130. 1990 Job accessibility and racial differences in youth employment rates. American Economic Review 80:267-276. 1974 Kain, John F. 1968 Housing segregation, Negro employment, and metropolitan decentralization. The Quarter) Journal of Economics 82:175-197. 1974 Reply to Stanley Masters' comment on "Housing Segregation, Negro Employ ment, and Metropolitan Decentralization." Quarterly Joumal of Economics 88:511-519.

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222 INNER-CITY POVERTY IN THE UNITED STATES Kasarda, John 1989 Urban industrial transition and the underclass. 17'e Annals of the American Academy of Political and Social Science 501:26-47. Kimchenman, Joleen, and Kathryn Neckerman Forth- We'd love to hire them, but . . .: The meaning of race for employers. coming In Christopher Jencks and Paul Peterson, eds. 17'e Urban Ur~erc~*s. Washington, D.C.: Brookings Institution. Leonard, Jonathan S. 1986 Space, Time, and Unemployment: Los Angeles 1980. Unpublished paper, School of Business Administration, University of California, Berkeley. 1987 The interaction of residential segregation and employment discrimination. Journal of Urban Economics 21:323 346. Massey, Douglas S., and Nancy A. Denton 1988 Suburbanization and segregation in U.S. metropolitan statistical areas. AmeT- ican Journal of Sociology 94~3):592-626. Massey, Douglas S., and Mitchell Lo Eggers 1989 The ecology of inequality: Minorities and the concentration of poverty 1970-1980. National Opinion Research Center, University of Chicago. Mastem, Stanley H. 1974 A note on John Kain's "Housing Segregation, Negro Employment, and Metropolitan Decentralization." Quarterly Journal of Economics 88:505-519. Black-White Income Differentials: Empirical Studies and Policy Implications. New York: Academic Press. Mooney, Joseph D. 1969 Housing segregation, Negro employment, and metropolitan decentralization: An alternative perspective. Quarterly Journal of Economics 83:299-311. National Center for Educational Statistics 1988 Digest ofEducational Statistics. Washington, D.C: U.S. Government Printing Office. Odner, Paul, and Daniel H. Saks 1971 A note on John Kain's "Housing Segregation, Negro Employment, and Metropolitan Decentralization." Me Quarterly Joumal of Economies 191:147- 160. Price, R., and E. S. Mills 1985 Race and residence in earnings determination. Joumal of Urban Economics 17:1-18. Reid, Clifford 1984 Are blacks making it in the suburbs? Joumal of Urban Econonucs 16:357-359. Straszheim, Mahlon R. 1980 Discrimination and the spatial characteristics of the urban labor market for black workers. Journal of Urban Economics 7:119-140. Vrooman, John, and Stuart Greenfield 1980 Are blacks making it in the suburbs? Some new evidence on intrametropoli- tan spatial segmentation. Journal of Urban Economics 7:155-167. Wilson, William Julius 1987 The Truly Disadvantaged. Chicago: University of Chicago Press. 1~75