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Issue #31 | February 11, 2020

Recently, from the Cleveland Fed

  • FedTalk: What is behind the persistence of the racial wealth gap?

    On average, black households in the US have considerably less wealth than white households. Why hasn’t this gap closed over the past half century, even with the passage of civil rights legislation? Watch this video to hear Cleveland Fed researchers and leaders from area organizations discuss what can be done, how long it might take to close the gap, and how economics can help explain racial inequities in wealth.

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  • What’s in the inflation forecast? Market-based inflation measures can help us find out

    To reduce the lag between enacting policy and its economic effects, some monetary policymakers emphasize the importance of setting policy in a forward-looking manner. They argue that better forecasting tools for key variables such as inflation can lead to better policy. Explore the potential for market-based inflation measures to improve inflation forecasting.

  • Some ways a Cleveland-based program helps formerly incarcerated people: Skills training, counseling, and support

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  • Missed our inflation conference? Not to worry

    See an overview of the papers researchers presented at the event. The papers cover international influences on inflation, the formation of inflation expectations, and price-setting behavior and inflation. (PS: You still have a couple of days to answer our call for papers for the 2020 inflation conference we’re hosting on May 21─22.)


Your research has found that there’s reason to focus policy efforts to improve neighborhoods in order to improve opportunities for people. Where did you grow up, and how did it affect you? What did your research find about the influence of neighborhoods on us?


I grew up in a suburb on the north side of Indianapolis. When I think about my neighborhood’s effects in the context of the research I’m doing, I think about some of the things I didn’t have to deal with as a kid. I’m grateful for the peaceful childhood my neighborhood afforded me.

In an Economic Commentary years ago, I found two really interesting things: one, that black boys born between 1980 and 1984 were exposed to tremendous amounts of violence at a young age nationwide—26 percent of black boys said they saw someone shot or shot at before the age of 12. We’re talking little kids being exposed to things that would be traumatic for adults to experience.

One might imagine that the 26 percent exposed to this violence represent the subset of kids who put themselves in especially risky situations. But where I grew up, even the subset of kids who put themselves in risky situations wasn’t seeing people getting shot at 9, 10, or 11 years old. In my neighborhood, I didn’t have to worry about my physical safety. I could play with my friends outside. I was exposed to different types of role models who made me feel nurtured and encouraged to grow.

The second thing I found? If you were exposed to gun violence at a young age, you are more than twice as likely to engage in violence at age 15. Race, mother’s educational attainment, single versus two-parent family structure—those things don’t matter in terms of engaging in violence or graduating from high school once one controls for exposure to violence at a young age.

We could do more to support the kids growing up in poor and violent neighborhoods. You can see this in our research connected with Moving to Opportunity (MTO). MTO was a once-in-a-generation experiment that aimed to move people from high-poverty neighborhoods to lower-poverty neighborhoods. A follow-up study made it appear that neighborhoods weren’t as important as previously thought. People moved to lower-poverty neighborhoods, but their outcomes (education and labor market success, for example) didn’t change. Our research argues that MTO shows that neighborhoods do matter. We found the quality of the schools in the places where participants moved wasn’t much better, and the percentage of poverty in their new neighborhoods might have been 40 percent rather than 50, on average. Given that 40 percent poverty is still completely exceptional and out of the mainstream, in the sense that very few people experience such concentrated poverty, I wouldn’t expect the effects of such a move to be large. The bigger lesson to take from the experiment, though, is the importance of racial segregation: Black people moved from really poor black neighborhoods to black neighborhoods that look a lot like high-poverty white neighborhoods. The typical poverty rate in even the destination black neighborhoods is exceptional for white neighborhoods.

The types of environments that we create through policy matters a lot. The kinds of neighborhoods, the structure of a city—its transportation, access to green spaces, public security, and more—can really matter for the success of its residents.

Dionissi Aliprantis

is a senior research economist with the Cleveland Fed focusing on human capital formation, racial inequality, and neighborhood effects.

By the Numbers

On the Calendar

  • February 27

    Women in Economics Symposium (Cleveland, OH)

  • March 9–12

    2020 National Interagency Community Reinvestment Conference (Denver, CO)

  • April 9

    Investment Connection Orientation and CRA Training (Erie, PA)
    (Learn more about Investment Connection.)

  • May 27–29

    2020 Reinventing Our Communities Conference: Equity InSight (Philadelphia, PA)

  • A date you choose*

    A Cleveland Fed expert presents or speaks to an audience of yours.

    *Please give us three months’ notice; note, we may not be able to accommodate all requests.

From around the Federal Reserve System

One cyberattack, one major bank, one huge network affected

A New York Fed study finds that if there is a cyberattack on just one major US bank, it can ripple rapidly to other banks and cripple cash flow. Because of the shared vulnerability, 38 percent of the US financial network could ultimately be affected. It gets worse. If attackers want “maximum disruption,” timing an attack on a day when the total payment activity is at a high level or targeting a geographic location with concentrated banking markets could cause an even greater shock. Read the complete analysis.

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