The place where a child grows up in America shapes their economic future to a significant degree. One long-suspected explanation is racial segregation, but proving whether segregation actually causes worse outcomes—rather than just correlating with them—has been challenging for economists.

In a paper in the American Economic Journal: Applied Economics, authors Eric Chyn, Kareem Haggag, and Bryan A. Stuart provide evidence that racial segregation shapes the long-run economic prospects of American children.

Using the placement of railroad tracks in the 19th century, they found that a one standard deviation increase in segregation—roughly the gap between Minneapolis and Philadelphia—cost a Black child from a poor family about $4,200 a year in income as an adult. While lower-income Black children were hit the hardest, segregation also hurt higher-income Black children and lower-income White children.

Chyn recently spoke with Tyler Smith about why segregation hurts low-income kids in particular and what his findings imply for policymakers.