Inner-City Firms and the Employment Problem of the Urban Poor: Are Poor People Really Excluded from Jobs Located in their Own Neighborhoods?

Abstract

This article investigates whether the employment problem of the urban poor has been exacerbated by inner-city employers and their use of hiring practices that limit local employment opportunities for residents of these neighborhoods. By using the Urban Poverty and Family Life Study’s survey of Chicago-area employers, this article estimates the effects of neighborhood poverty on a firm’s recruitment and screening practices while also estimating the impact of hiring practices and neighborhood poverty on the employment of local residents. The results suggest that the level of poverty in a firm’s neighborhood does not alter screening practices but significantly reduces recruitment through personal referrals and media advertisements. However, these different recruitment patterns do not significantly reduce a firm’s employment of neighborhood residents. Nor does firm-level neighborhood poverty affect its employment of neighborhood residents. Overall, these results suggest that inner-city residents are not excluded from jobs located in their own neighborhoods.