Income Segregation and Income Inequality

Abstract

Many factors influence the way a child grows and develops, but it is clear that, when it comes to adult outcomes, neighborhoods matter.1 In income-segregated cities, neighborhoods vary widely by school quality, amenities, and demographics. As a result, parents in these cities must spend more money to access better neighborhoods for their children’s development. A related factor is income inequality, which has increased substantially in the United States over the past 40 years. High-income parents have more money to spend on their children, and the return on these investments has increased.2 We examined the relationship between city-level income segregation and income inequality and found it has changed over time. In 1980, cities with more income inequality did not exhibit higher income segregation. But by 2015, that pattern had changed: Cities with higher levels of income inequality now also have higher levels of income segregation.