Tipping and the Effects of Segregation

Abstract

We analyze how neighborhood ethnic population composition affects the short- and long-run education and labor market outcomes of natives and immigrants. To overcome the problem of nonrandom sorting across neighborhoods, we borrow theoretical insights from the tipping point literature and exploit estimated tipping thresholds as instruments for changes in ethnic population composition. Our results provide little evidence in support of the idea that living in a neighborhood with a higher immigrant share leads to worse outcomes. (JEL I20, J15, J24, R23)