Can Boosting Minority Car-Ownership Rates Narrow Inter-Racial Employment Gaps?

During the past three decades, considerable effort has been devoted to assessing the importance of spatial mismatch in determining racial and ethnic differences in employment outcomes. The hypothesis posits that persistent racial housing segregation in U.S. metropolitan areas coupled with the spatial decentralization of employment have left black and, to a lesser extent, Latino workers physically isolated from ever-important suburban employment centers. Given the difficulties of reverse commuting by public transit and the high proportions of blacks and Latinos that do not own cars, this spatial disadvantage literally removes many suburban locations from the opportunity sets of inner-city minority workers.

Mismatch proponents argue that closing racial and ethnic gaps in employment and earnings requires improving the access of spatially isolated minorities to the full set of employment opportunities within regional economies. Improving accessibility can be accomplished through a combination of community development, residential mobility, and transportation programs.¹ Among the latter set of options, a potential tool for enhancing accessibility would be to increase auto access for racial and ethnic minorities. Racial differences in car-ownership rates are large, comparable in magnitude to the black-white difference in home-ownership rates documented by Melvin L. Oliver and Thomas M. Shapiro.² Moreover, car-ownership rates for low-skilled workers are quite sensitive to small changes in operating costs, suggesting that moderate subsidies may significantly increase auto access for racial and ethnic minorities.³

In this chapter, we assess whether boosting minority car-ownership rates would narrow inter-racial employment rate differentials. We pursue two empirical strategies. First, we explore whether the effect of auto ownership on the probability of being employed is greater for more spatially isolated populations. The housing segregation literature demonstrates that blacks are highly segregated from the majority white population and in a manner that isolates blacks from new employment opportunities. Latino households are also segregated, though to a lesser degree than black households. If mismatch reduces minority employment probabilities, and if auto ownership can partially undo this effect, the employment effect of auto ownership should be greatest for the most segregated populations (that is, blacks, then Latinos, then whites).⁴ We test this proposition using microdata from the Survey of Income and Program Participation (SIPP).

Next, we investigate whether the differences in the car-employment effects between blacks and whites increases with the severity of spatial mismatch. If spatial mismatch yields a car-employment effect for blacks that is larger than that for whites, then the black-white difference in the car-employment effect should be larger in metropolitan areas where blacks (relative to whites) are particularly isolated from employment opportunities. To test this proposition, we first estimate the black-white difference in the car-employment effect for 242 metropolitan areas in the United States. Next, we construct corresponding metropolitan-area measures of the relative spatial isolation of blacks from employment opportunities. We then test for a positive relationship between these two metropolitan-area level variables.

We find strong evidence that having access to a car is particularly important for African Americans and Latinos. We find a difference in employment rates between car-owners and non-car-owners that is considerably larger among blacks than among whites. Moreover, the car-employment effect for Latinos is significantly greater than the comparable effect for non-Latino whites yet significantly smaller than the effect for blacks. Finally, the black-white difference in the car-employment effect is greatest in metropolitan areas where the relative isolation of blacks is most severe. Our estimates indicate that raising minority car-ownership rates to that of whites would considerably narrow inter-racial employment rate differentials.

Auto Access, Race, and Labor Market Prospects

During the past three decades, household access to automobiles in the United States has increased considerably. Between 1969 and 1995, the average number of automobiles per household doubled from one to two. Moreover, this increase coincided with a 17 percent reduction in household size. Over the same period, the number of households with zero vehicles declined from 13 million (21 percent of the 1969 household...