East Side Story: historical pollution and persistent neighborhood sorting

Why are the east sides of formerly industrial cities more deprived? To answer this question, we use individual-level census data and create historical pollution patterns derived from the locations of 5,000 industrial chimneys and an atmospheric model. We show that this observation results from path dependent neighborhood sorting that began during the Industrial Revolution as prevailing winds blew pollution eastwards. Past pollution explains up to 20% of the observed neighborhood segregation in 2011, even though coal pollution stopped in the 1970s. We develop a quantitative model to identify the role of neighborhood effects and relocation rigidities in underlying this persistence