The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects
Raj Chetty, Nathaniel Hendren
Quarterly Journal of Economics·2017
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.