Does segregation matter for Latinos?

We estimate the effects of residential racial segregation on socio-economic outcomes for native-born Latino young adults over the past three decades. Using individual public use micro-data samples from the Census and a novel instrumental variable, we find that higher levels of metropolitan area segregation are associated with negative effects on Latino young adults’ likelihood of being either employed or in school, on the likelihood of working in a professional occupation, and on income. The negative effects of segregation are somewhat larger for Latinos than for African Americans. Controlling for Latino and white exposure to neighborhood poverty, neighbors with college degrees, and industries that saw large increases in high-skill employment explains between one half and two thirds of the association between Latino-white segregation and Latino-white gaps in outcomes.