**The End of the American Dream? Inequality
and Segregation in US Cities** joint with Alessandra Fogli

Abs tract:

Since the '80s the US has experi enced not only a steady increase in income inequality, but also a contempor aneous increase in residential segregation by income. Using US Census data, we document a positive correlation between income inequality and residenti al segregation between 1980 and 2010, both across time and across space, at the MSA level. We then develop a general equilibrium overlapping generatio ns model where parents choose the neighborhood where to raise their childre n and invest in their children's human capital. In the model, segregation a nd inequality amplify each other because of a local spillover that affects the returns to education. We calibrate the model to 1980 using Census data and the micro estimates of the local spillover effect derived by citet*{Che HenII}. We then hit the economy with a skill premium shock and show that ro ughly between $20%$ and $30%$ of the increase in inequality can be attribut ed to the amplifying effect of the local spillovers.

DTSTAMP:20220811T150601Z DTSTART:20190704T110000Z DTEND:20190704T120000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR