Economics of Mobility Meeting, Fall 2021

Barr, Eggleston, and Smith provide evidence of the long-run effect of income provided during the first year of life. The researchers take advantage of the January 1 birthdate cutoff for child-related tax benefits, which results in families of otherwise similar children receiving substantially different amounts of income. Using the universe of administrative tax data in selected years, Barr, Eggleston, and Smith show that an additional $1,000 of income during the first year of life increases young adult earnings by at least 1-2%, with larger effects for males. These effects show up earlier in terms of improved math and reading test scores and a higher likelihood of high school graduation. Estimates of parental behavior in the years after birth suggest an important role for liquidity during the year after birth.

Can transport infrastructure promote intergenerational mobility? This paper estimates the causal impact of the railroad network on intergenerational occupation mobility in nineteenth century England and Wales. Mohnen, Guerra, and Costas-Fernandez create a new dataset of father and son pairs by linking individuals across the 100% censuses of 1851, 1881 and 1911. By geolocating individuals down to the street level, the researchers measure access to the railroad network using the distance to the nearest train station. To address the non-random access to the railroad network, they create a hypothetical railway map based solely on geographic cost consideration. Mohnen, Guerra, and Costas-Fernandez find that sons who grew up one standard deviation (roughly 5 km) closer to the train station are 6 percentage points more likely to work in a different occupation than their father and 5 percentage points more likely to be upward mobile. Access to the railroad network benefitted families at the top and bottom of the occupational ranking. Through a decomposition exercise, the researchers find that the majority of upward mobility is driven by improvements in local labour opportunities.

Aaronson, Eli, Hartley, Lleras-Muney, Mazumder, and Stinson estimate the long-run effects of the 1930s Home Owners Loan Corporation (HOLC) redlining maps on census tract-level measures of socioeconomic status and economic opportunity from the Opportunity Atlas (Chetty et al. 2018). The researchers use two identification strategies to identify the long-run effects of differential access to credit along HOLC boundaries. The first compares cross-boundary differences along actual HOLC boundaries to a comparison group of boundaries that had similar pre-existing differences as the actual boundaries. A second approach uses a statistical model to identify boundaries that were least likely to have been chosen by the HOLC. Aaronson, Eli, Hartley, Lleras-Muney, Mazumder, and Stinson find that the maps had large and statistically significant causal effects on a wide variety of outcomes measured at the census tract level for cohorts born in the late 1970s and early 1980s.

Does screening applicants using exams hurt or help the chances of candidates from disadvantaged backgrounds? Although a common critique to exams is that they might negatively impact the chances of applicants from poorer backgrounds, exams might replace other more discretionary criteria in which such applicants are at an even worse disadvantage. Pérez and Moreira answer this question using evidence from the 1883 Pendleton Act, which introduced competitive exams for selecting some employees in the US federal government. While the reform increased the representation of "educated outsiders" (individuals with high education but limited connections), it reduced the share of individuals from disadvantaged backgrounds. This decline was driven by an increased representation of the middle class, with limited change in the representation of applicants from upper-class backgrounds. The drop in the representation of workers from poorer backgrounds was stronger among applicants from states with more unequal access to schooling.

This paper studies how exclusive social groups shape upward mobility and whether interactions between low- and high-status peers can integrate the top rungs of the economic and social ladders. Their setting is Harvard in the 1920s and 1930s, where new groups of students arriving on campus encountered a social system centered on exclusive old boys' clubs. Michelman, Price, and Zimmerman combine archival and Census records of students' college lives and careers with a room randomization design based on a scaled residential integration policy. Michelman, Price, and Zimmerman first show that high-status students from prestigious private high schools perform worse academically than other students but are more likely to join exclusive campus clubs. Club members go on to earn 32% more than other students and are more likely to work in finance and join country clubs, both characteristic of the era's elite. The membership premium persists after conditioning on high school, legacy status, and even family. Random assignment to high-status peers increases participation in exclusive college clubs, but overall effects are driven entirely by large gains for private school students. In the long run, a 50 percentile increase in residential peer group status raises the rate at which private school students work in finance by 40% and their membership in adult social clubs by 26%. Michelman, Price, and Zimmerman conclude that social interactions among the educational elite mediated access to top positions in the post-war United States but did not provide a path to these positions for underrepresented groups. Turning to recent cohorts, Michelman, Price, and Zimmerman show that while Harvard students differ from the past in their racial, ethnic, and gender composition, the path for high-status students from clubs to finance careers still exists, and elite university students from the highest-income families continue to earn more than others.

Neighborhoods are an important determinant of economic opportunity in the United States. Less clear is how neighborhoods affect economic opportunity. Here Colmer, Voorheis, and Williams provide early evidence on the importance of environmental quality in shaping economic opportunity. Combining 36 years of satellite derived PM2.5 concentrations measured over roughly 8.6 million grid cells with individual-level administrative data provided by the U.S. Census Bureau and Internal Revenue Service (IRS), the researchers first document a new fact: early-life exposure to particulate matter is one of the top five predictors of upward mobility in the United States. Next, using regulation-induced reductions in prenatal pollution exposure following the 1990 Clean Air Act Amendments, Colmer, Voorheis, and Williams estimate significant increases in adult earnings and upward mobility. Combining their estimates with new individual-level measures of pollution disparities at birth their estimates can account for up to 20 percent of Black-White earnings gaps, and 25 percent of the Black-White gap in upward mobility estimated in Chetty et al. (2018b). Combining their estimates with experiment-induced reductions in pollution exposure from the Moving to Opportunity (MTO) experiment, Colmer, Voorheis, and Williams can account for 15 percent of the total neighborhood earnings effect estimated in Chetty et al. (2016). Collectively, these findings suggest that disparities in environmental quality may play a meaningful role in explaining observed patterns of income inequality and economic opportunity in the United States.