NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects

Raj Chetty, Nathaniel Hendren

NBER Working Paper No. 23001
Issued in December 2016, Revised in May 2017
NBER Program(s):Children, Labor Studies, Public Economics

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.

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Document Object Identifier (DOI): 10.3386/w23001

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