The Effects of Housing Market Discrimination on Earnings Inequality

William Darity, Jr., University of North Carolina at Chapel Hill
Kris Marsh, University of Maryland
Samuel L. Myers, Jr., University of Minnesota

The ratio of black-white loan denial rates and residential segregation can capture a measure of racialized outcomes in a metropolitan area. Individual level earnings gaps may be explained by these place-based racialized outcomes. Our descriptive results suggest that higher black-white loan denial rates and higher black-white segregation rates are associated with larger earnings gaps. Our OLS regression models include: estimating log-earnings equations with a dummy variable for race, controlling for the loan denial ratio, controlling for index of dissimilarity, and estimating the earnings equations separately for the MSAs in quintiles based on loan denial and segregation. There is little change in the race effect when controlling for lending disparities and modest change when controlling for residential segregation. Despite the apparent inverse relationship between these place-based outcomes and earnings ratios, when controls are made for other determinants of earnings, there is little impact of these measures on individual earnings gaps.