The Impacts of Neighborhoods on Intergenerational Mobility II: County-Level Estimates

Raj Chetty, Nathaniel Hendren

NBER Working Paper No. 23002
Issued in December 2016
NBER Program(s):   CH   LS   PE

We estimate the causal effect of each county in the U.S. on children's earnings and other outcomes in adulthood using a fixed effects model that is identified by analyzing families who move across counties with children of different ages. Using these estimates, we (a) quantify how much places matter for upward mobility, (b) construct predictions of the causal effect of growing up in each county that can be used to guide families seeking to move to opportunity, and (c) characterize which types of areas produce better outcomes. For children growing up in low-income families, each year of childhood exposure to a one standard deviation (SD) better county increases income in adulthood by 0.5%. Hence, growing up in a one SD better county from birth increases a child's income by approximately 10%. There is substantial local area variation in children's outcomes: for example, growing up in the western suburbs of Chicago (DuPage county) would increase a given child's earnings by 30% relative to growing up in Cook county. Counties with less concentrated poverty, less income inequality, better schools, a larger share of two-parent families, and lower crime rates tend to produce greater upward mobility. Boys' outcomes vary more across areas than girls, and boys have especially poor outcomes in highly segregated areas. One-fifth of the black-white earnings gap can be explained by differences in the counties in which black and white children grow up. Areas that generate better outcomes tend to have higher house prices, but our approach uncovers many “opportunity bargains” – places that generate good outcomes but are not very expensive.

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Document Object Identifier (DOI): 10.3386/w23002

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