ARE GHETTOS GOOD OR BAD

Spatial separation of racial and ethnic groups may theoretically have positive or negative effects on the economic performance of those grou ps. We examine the effects of segregation on outcomes for blacks in sc hooling, employment, and single parenthood. We find that blacks in mor e segregated areas have significantly worse outcomes than blacks in le ss segregated areas. We control for the endogeneity of location choice using instruments based on political factors, topographical features, and residence before adulthood. A one standard deviation decrease in segregation would eliminate one-third of the black-white differences i n most of our outcomes.