The FRED Blog has used data from the US Census to discuss income inequality and racial housing patterns across the US at the county level. Today, we tap into those datasets again to highlight two different city-level extremes of economic inequality.
The FRED graph above shows Census data on the racial dissimilarity index (solid lines) and income inequality (dashed lines) in two locations: Miami-Dade County, Florida (in orange), and Lackawanna County, Pennsylvania (in purple).
Why those two counties? Because they’re home to Miami and Scranton, one of the most and one of the least income-segregated large US cities, respectively.
Recent research from Hannah Rubinton and Maggie Isaacson at the St Louis Fed examines the relationship between income inequality and income segregation in the 100 largest US cities: Their calculations show that, in 2015, Miami was the 3rd most-unequal in income distribution and in the top 25% of most-income-segregated cities. Scranton, on the other end, was 3rd least-unequal in income distribution and 4th least-income-segregated of all 100 cities.
For more about this and other research, visit the website of the Research Division of the Federal Reserve Bank of St Louis, which offers an array of economic analysis and expertise provided by our staff.
A little bit more about the analysis from Rubinton and Isaacson: They find that cities with higher levels of income inequality have higher levels of income segregation. They use neighborhood-level Census data for each city and measure income inequality using the Gini coefficient. This coefficient ranges between 0 and 1, where larger values indicate a more-unequal distribution of income within a city. They measure income segregation by comparing the distribution of income in each neighborhood to the overall distribution of income in the city. They calculate an index that ranges between 0 and 1, where larger values indicate it’s more common for different income groups to live in different areas of a city.
How this graph was created: Search FRED for “White to Non-White Racial Dissimilarity (5-year estimate) Index for Miami-Dade County, FL.” Next, click the “Edit Graph” button, select the “Add Line” panel, and search for the same series for Lackawanna County, PA. Repeat the “Add Line” step to add both the “Income Inequality” series in Miami-Dade County and in Lackawanna County to the graph. Last, use the “Format” panel to change the Y-axis position of the income inequality series and to customize the color and format of the lines.
Suggested by Diego Mendez-Carbajo.