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Laura Weiwu (Stanford): Unequal Access: Racial Segregation and the Distributional Impacts of Interstate Highways in Cities

Abstract: This paper investigates the impact of the largest infrastructure project in American history— the Interstate highway system—on racial inequality and the role of institutional segregation in its disparate incidence. To evaluate the distributional impacts, I develop a general equilibrium spatial framework that incorporates empirical estimates using novel disaggregated commute flows from Census microdata in 1960 and 1970 for 25 cities. I show that highways generated substantial costs from local harms on adjacent areas as well as benefits from reductions in commute times. In the urban core, costs outweigh benefits as proximity to highways is greater and commute time reductions are lower since connectivity improves predominantly in remote suburbs. I find the initial concentration of the Black population in central areas and their low mobility away are key contributors to their welfare losses from the Interstate highway system. Exclusionary institutions, delineated using redlining maps, account for much of their concentration in addition to sorting on housing prices and preferences for racial composition. These institutional barriers further inhibit their spatial mobility outwards. When barriers are eliminated and Black households are granted access beyond central neighborhoods, the racial gap in impacts is reduced as the Black population benefits more from interstate development. These results highlight how segregation shapes inequality in the incidence of place-based shocks.