The long run effects of de jure discrimination in the credit market: How redlining increased crime

Abstract

Today in the United States the welfare costs of crime are disproportionately borne by individuals living in predominately African-American or Hispanic neighborhoods. This paper shows that redlining practices established in the wake of the Great Depression made lasting contributions to this inequity. First I use an unannounced population cutoff that determined which cities were redline mapped to show that redline mapping increased present-day city level crime. Secondly, I use a spatial regression discontinuity to show that redlining influenced the present-day neighborhood level distribution of crime in Los Angeles, California. I also identify channels though which redline mapping influenced crime including increasing racial segregation and decreasing educational attainment.