Working Paper: NBER ID: w23001
Authors: Raj Chetty; Nathaniel Hendren
Abstract: We show that the neighborhoods in which children grow up shape their earnings, college attendance rates, and fertility and marriage patterns by studying more than seven million families who move across commuting zones and counties in the U.S. Exploiting variation in the age of children when families move, we find that neighborhoods have significant childhood exposure effects: the outcomes of children whose families move to a better neighborhood – as measured by the outcomes of children already living there – improve linearly in proportion to the amount of time they spend growing up in that area, at a rate of approximately 4% per year of exposure. We distinguish the causal effects of neighborhoods from confounding factors by comparing the outcomes of siblings within families, studying moves triggered by displacement shocks, and exploiting sharp variation in predicted place effects across birth cohorts, genders, and quantiles to implement overidentification tests. The findings show that neighborhoods affect intergenerational mobility primarily through childhood exposure, helping reconcile conflicting results in the prior literature.
Keywords: intergenerational mobility; neighborhood effects; childhood exposure; economic outcomes
JEL Codes: H0; J0; R0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| moving to a better neighborhood (R23) | improves a child's income rank in adulthood (I24) |
| each additional year spent in a better neighborhood (R23) | higher long-term economic outcomes (F69) |
| moving to a neighborhood with one percentile higher income among permanent residents (R23) | increase in child's income rank (J13) |
| moving to a better neighborhood (R23) | higher college attendance rates (I23) |
| moving to a better neighborhood (R23) | higher marriage rates (J12) |