Racial income disparities in large urban areas

What is it about?

Big cities provide huge opportunities for workers to climb up the income ladder through their large number and diversity of jobs. Big cities also have higher racial wage inequality, which is getting worse over time. We show that this is almost entirely explained by "experience effects"; the initial benefits of locating in a big city are not that different across race, but over time, White workers get much greater returns to each year they spend working in a big city than Black and Latinx workers.

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Photo by Avi Richards on Unsplash

Photo by Avi Richards on Unsplash

Why is it important?

With big cities' soaring housing costs, long commutes, and intense inequalities, academics and the media are increasingly reevaluating their long-held faith in America's largest cities as engines of opportunity. A major component of this opportunity is the much higher levels of income mobility that workers experience in big cities, as compared to the rest of the economy. The fact that these income mobility opportunities are very weak for Black and Latinx workers poses serious challenges to the viability of big cities as engines of opportunity for these workers.