Research Report The Cost of Segregation
National Trends and the Case of Chicago, 1990–2010
Gregory Acs, Rolf Pendall, Mark Treskon, Amy Khare
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Policymakers and advocates have spent decades trying to respond to the reality and consequences of racial residential segregation. Recently, there has been a growing effort to confront rising levels of economic segregation as well.

While substantial evidence exists on the harms of segregation for people with lower incomes or racial and ethnic minorities, its effect on regional outcomes has been less clear.

Urban’s report addresses these questions and concerns by analyzing the 100 most populous commuting zones (which are similar to metropolitan areas) between 1990 and 2010. We found that one pattern holds across all of our measurements: economic segregation impedes the economic progress of a region’s residents, but particularly its black residents.

This research has three main takeaways:

  • The country is changing in terms of spatial patterns but remains starkly segregated by race and income.
  • There is a real cost to segregation, which varies by race and ethnicity.
  • Chicago continues to struggle as a highly segregated metropolitan area, with major effects for all residents.

Economic segregation fell in the 1990s but started up again after 2000. Between 2000 and 2010, 72 commuting zones saw their economic segregation levels increase. Overall, blacks and whites tend to be more segregated from one another than Latinos and whites, although black-white segregation declined, on average, between 1990 and 2010. More racially segregated regions also tend to also be more economically segregated.

The interconnected relationship between economic and racial segregation speaks to the fact that the costs segregation imposes on residents vary by race and ethnicity. Indeed, when looking at the effect of segregation on individual racial groups, the clearest story emerges for black residents:

  • Higher levels of economic segregation are associated with lower median and per capita income for blacks, while higher levels of black-white segregation are associated with lower black per capita income. Neither economic segregation nor racial segregation is significantly related to white or Latino median or per capita income.
  • Higher levels of black-white segregation are also associated with lower levels of four-year college degree attainment for both blacks and whites, as well as higher homicide rates. 

In examining segregation within the Chicago region and how it influences quality of life outcomes there, we found mixed results. Although regional segregation levels have fallen slightly in recent decades, it remains one of the most segregated regions in the country, in economic segregation and especially in black-white and Latino-white segregation.

We then estimated how much segregation costs the Chicago region by using our analysis results to determine how regional outcomes would change if Chicago’s segregation fell. If, for example, Chicago could reduce its level of economic segregation to the average level of the 100 largest commuting zones, black per capita incomes would go up an estimated 2.7 percent (or $527), with an overall aggregate increase of $772 million.

And if Chicago could reduce its level of black-white racial segregation to the average level of the 100 largest commuting zones, we estimate the following:

  • Black per capita incomes would increase 12.4 percent (or $2,455).
  • Educational attainment rates for both black and white residents would increase 2 percent each, with 83,000 more adults completing a college degree (78 percent of these new graduates would be white; 22 percent would be black).
  • Finally, the city’s highly documented homicide rate would drop 30 percent (e.g., the 553 homicides in 2010 would fall to 386, a decrease of 167 homicides).

This report represents the first step in mapping out the implications of current trends on the Chicago region’s future trajectory, and to assess how policy levers could address these developments and promote more equitable pathways.

This research is based upon work supported by the Urban Institute through funds provided by the Chicago Community Trust and the John D. and Catherine T. MacArthur Foundation. We thank them for their support but acknowledge that the findings and conclusions presented in this report are those of the authors and do not necessarily reflect the opinions of the Urban Institute or the Metropolitan Planning Council.

Research Areas Wealth and financial well-being Neighborhoods, cities, and metros Race and equity
Tags Employment and income data Racial and ethnic disparities Job opportunities Wealth inequality Inequality and mobility Racial inequities in employment
Policy Centers Metropolitan Housing and Communities Policy Center