Neighborhood Sorting, Metros, and Tomorrow's Labor Force

In this Economic Commentary, we look at how households sort into neighborhoods in different metro areas and analyze these patterns by race, ethnicity, and income. We find that in many metros, Black households face a significant tradeoff between a neighborhood's Black population share and its socioeconomic status (SES), with many high-income Black households residing in lower SES neighborhoods than is the case for white households of similar income. A similar pattern exists for Hispanic households. Because a neighborhood's SES correlates with the labor market outcomes of the children who grow up there, these sorting patterns could, over time, act to limit workforce productivity, and individual earnings, by restraining skill acquisition for youth residing in under-resourced areas.