From an interview in Vox:
Are red or blue areas more mobile?
Ezra Klein: Because you’ve done such granular work on which neighborhoods throughout the US provide opportunity, I’m curious if you’ve developed a view on whether political ideology plays a role here. Does living in a more blue or red area have a significant impact on opportunity?
Raj Chetty: When you look regionally, you tend to find that the highest levels of upward mobility are in the Great Plains and some parts of the coast, while you have far lower levels in much of the Southeast. If you were to just take that data you will find essentially a zero correlation with Republican and Democratic voters.
If you zoom into local areas, you will find that a lot of the variation in upward mobility is actually coming from neighborhoods that are just a few miles apart from each other — often within the same city. There are parts of the Bay Area, for example, like Redwood City, that are relatively affordable with quite high rates of upward mobility. But just a few miles down the road in East Palo Alto, you find much lower levels of upward mobility.
Nobody except me ever calls Raj Chetty on his examples. Redwood City and East Palo Alto, for instance, are not obscure, remote places, they are near Stanford in the Silicon Valley. A huge number of smart people have some familiarity with them.
Redwood City is home to Oracle, a vast corporation founded by zillionaire Larry Ellison. I spent 9 days in one of Oracles five skyscrapers in Redwood City shepherding an M&A deal in 1994. The 2010 Census reported that Redwood City’s demographics are:
- 40.9% white
- 38.8% Hispanic
- 10.7% Asian
- 2.4% black
- 1.0% Pacific Islander
Average rent in Redwood City is $3,336.
Recall Chetty’s methodology (at least as of 2015): compare the income of parents in 1996-2000 to the incomes of their children (around age 30) in 2011-2012. Blacker areas do not do well in Chetty’s studies because while everybody tends to regress toward their mean, blacks tend to regress toward a lower mean income. On the other hand, Hispanics, while averaging a lower mean income as well, are less likely to regress downward relative to their parents because so many of their parents were poor immigrants struggling with the English language.
East Palo Alto was the Murder Capital of America in 1992, although it has improved greatly in safety since then due (down from 42 homicides in 1992 to 1 in 2017) to Hispanics replacing blacks. Crime, by the way, is a big factor in Chetty’s findings about income mobility: if you have a black son, for example, you don’t want to raise him in a neighborhood with lots of black street gangs, because of the high risk that he will grow up to have an income that consists of pennies per hour making licenses plates in the State pen.
In 2010 East Palo Alto’s demographics were:
- 6.2% white
- 16.7% black
- 64.5% Hispanic
- 7.5% Pacific Islander
- 3.8% Asian
Average rent in East Palo Alto is now $2,746, due to rapid gentrification in recent years.
The post 2010 gentrification of East Palo Alto has brought rents closer together, but obviously Redwood City has the superior demographics for the purposes of Chetty’s analyses.
With the rapid decline of East Palo Alto’s black population and levels of violence, it might well be that Hispanicizing East Palo Alto no longer has the Tragic Dirt observed by Chetty’s methodology. The Wikipedia page on East Palo Alto (which, by the way, is north of Palo Alto, not east) is fairly frank, franker than Chetty:
43% of East Palo Alto’s residents were African Americans in 1990, which was the result of redlining practices and racial deed restrictions in Palo Alto. Latinos now constitute about 65% of the total population, while the proportion of African Americans has decreased to about 15%. A small minority of Pacific Islanders also reside in East Palo Alto, most of Tongan, Samoan and Fijian origin.. East Palo Alto has the largest concentration of Pacific Islanders of any American city or town outside Hawaii..
East Palo Alto has seen a dramatic drop in violent crime in the last 20 years, including a 97.6% reduction in murders from 1992 to 2017. In the past, East Palo Alto experienced profound crime and poverty, especially during the 1980s and early 1990s. In 1992, it had the highest homicide rate in the country with 24,322 people, and 42 murders, equaling a rate of 172.7 homicides per 100,000 residents. In 2017, it had only one murder.
The prosperity that benefited the Silicon Valley during the dot-com boom of the late 1990s largely bypassed East Palo Alto. The Ravenswood City School District, which serves East Palo Alto and part of adjoining Menlo Park, has struggled with low academic performance. Eventually, however, the Peninsula’s shortage of land and soaring property prices meant that even East Palo Alto became an option for urban regeneration. Until recently, gentrification has been rare in East Palo Alto. …
Over 25% of East Palo Alto (400+ acres) has been bulldozed and replaced with brand new housing and brand-name retail establishments over the last 10–15 years, including IKEA, Target, Home Depot, Nordstrom Rack, Togo’s, Starbucks, Office Depot, Mi Pueblo Food Center, PGA Tour Superstore, 6 to 9 Dental, Jamba Juice and Izzy’s Brooklyn Bagels, attracting an entirely new demographic. The University Square community has become particularly appealing to young high-tech professionals and high-income couples, including many employees from Google, Facebook, Sun Microsystems, Yahoo!, and various other software and startup companies.