The paper provides evidence on the neighbourhood contact hypothesis, which states that interracial neighbourhood contact acts to break down prejudice. Contact, therefore, may result in stable racially integrated neighbourhoods. By exploiting unique features of new data from the Multicity Study of Urban Inequality, our estimates are the first to account directly for the endogeneity of contact. Results indicate that neighbourhood contact affects Whites' attitudes towards Black neighbours only if this contact is with Blacks of the same or higher social status. Blacks' attitudes towards White neighbours, on the other hand, are affected by neighbourhood contact regardless of the relative social status of participating Whites, although the effect is twice as strong if the contact is with Whites of equal or higher status.
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