Tipping points -- the dynamics of workplace segregation by race and ethnicity

Lingwen Zheng, Cornell University

Using a regression discontinuity (RD) design, I exploit the variation in base-year minority shares across single-establishment firms to document the dynamics of establishment-level segregation in two five-year intervals: 1995-2000 and 2000-2005. Using the Longitudinal Employer-Household Dynamics (LEHD) infrastructure files, I first show that systematic establishment-level segregation still exists in all industries. Then, I show that the dynamics of segregation among these single-establishment firms are non-linear and exhibit "tipping" patterns in both five-year intervals, although the magnitude is much larger in the earlier time period. The observed tipping pattern is primarily driven by non-Hispanic whites leaving. The effect due to minorities entering is much smaller. Alternative explanations such as non-linear changes in establishment characteristics or omitted variables do not explain the observed changes in minority shares. Finally, I find that, unlike the 1995-2000 period, during which tipping behavior seems to have been driven equally by blacks and Hispanics, Hispanics are the sole driving force in the 2000-2005 period. Taken together, this paper provides the first suggestive evidence that the dynamics of establishment-level segregation are highly nonlinear and exhibit a tipping pattern that is largely consistent with the Schelling (1971) social interaction model.