Neighborhood economic development and local working: The effect of nearby jobs on where residents work

Decreased earnings and employment rates are not the only effects of job loss in lower-income urban neighborhoods. A reduction in the proportion of residents of a neighborhood who work near the neighborhood, or the "local working rate," is another important effect to consider. Local working is likely to have positive impacts on quality of life and social capital, benefits that are not captured by earnings and employment rates. These impacts include decreased commuting and the development of information-rich local employment networks. Analysis of 1990 journey-to-work census data for the Chicago area shows that physical job proximity is found to be the principal determinant of local working. Also, the proportion of neighborhood residents who are black negatively and strongly affects the local working rate. A principal implication is that job-creating neighborhood economic development may have local working benefits. Black neighborhoods may have lower local working rates because of residents' ability to obtain good jobs with large employers or in the public sector, and such jobs are not located near these neighborhoods. More research is needed to explain this phenomenon.