Why are the east sides of formerly industrial cities more deprived? To answer this question, researchers Stephan Heblich, Alex Trew and Yanos Zylberberg use individual-level census data and create historical pollution patterns derived from the locations of 5,000 industrial chimneys and an atmospheric model. They show that this observation results from path-dependent neighborhood sorting that began during the Industrial Revolution, as prevailing winds blew pollution eastward. Past pollution explains up to 20% of observed neighborhood segregation in 2011, even though coal pollution stopped in the 1970s. They develop a quantitative model to identify the role of neighborhood effects and relocation rigidities underlying this persistence.

Read the article.