Human Capital in the Inner City

This paper quantitatively characterizes the "code of the street" from the sociology literature, using the nationally-representative National Longitudinal Survey of Youth 1997 data set to investigate how black young males alter their behavior when living in violent neighborhoods. An astounding 26 percent of black males in the United States report seeing someone shot before turning 12. Conditional on reported exposure to violence, black and white young males are equally likely to engage in violent behavior. Black males' education and labor market outcomes are much worse when reporting exposure to violence; these gaps persist in estimated models controlling for many patterns of selection.