Neighborhoods Matter

Our neighborhoods, in many ways, define our opportunities, according to cutting-edge research from the Equality of Opportunity project. Raj Chetty and Nathaniel Hendren studied data on more than 5 million families who moved between U.S. counties to find out whether moving effects children’s long-term earnings, college attendance, teen birth rates, and marriage rates. In addition, they estimated the effect of growing up in each and every U.S. county on these outcomes. The findings, which were featured this week in The New York Times, are stunning, and in some cases support, in other cases refute existing research, as described below.

Longer Time Spent  in a Low-Poverty Community, Better Outcomes

For children in low-income families, each year of living in a county with better children’s outcomes increased adult income by 0.5% -- that’s a 5% higher income if a low-income child moved to a county of opportunity by age 8. There is a 10% higher income if a low-income child spends birth through high school graduation in such a county. Chetty found better outcomes for children who move to a county with lower crime rates, lower concentrations of poverty, less income inequality, stronger schools, and more two-parent households. Leaving a segregated area was even more beneficial for boys than girls.

One striking aspect of Chetty’s research is that the disruptive nature of moving previously had been shown to have detrimental impacts on education and future earnings. Kathleen Ziol-Guest and Ariel Kalil, for example, found that moving between the ages of 6 and 10 is associated with lower earnings, fewer work hours, and less educational attainment later in life. Yet Chetty found that neighborhoods matter so much that moving to a higher-opportunity county outweighs the negative impacts of being uprooted.

Huge Earnings Increases for Young Children in Moving to Opportunity

Chetty’s work provides an intergenerational perspective on the effects of the Moving to Opportunity (MTO) research demonstration. Partnering with Lawrence Katz, the researchers linked MTO data with tax data to evaluate long-term outcomes for children who moved under MTO. They assessed outcomes for children who received MTO vouchers, Section 8 vouchers, or were in the study’s control group. The findings shine a new light on the MTO evaluation’s verdict that there were no benefits for employment and earnings for the parents.

By their mid-twenties, children who moved to a low-poverty area using an MTO voucher before the age of 13 earn 31% more than the control group. They also are more likely to attend college and less likely to be single parents. Demonstrating the importance of MTO’s voucher requirements, young children in families that moved with a regular Section 8 voucher outearned the control group as well, but the impact was about half that of the low-poverty MTO moves. For children age 13 or over, however, earnings differences were statistically insignificant or slightly negative.

More Evidence that Neighborhoods Matter

While there is more to learn about what is driving this upward mobility, we know some related facts about how neighborhoods are drivers of economic mobility, education, and health. A meta-analysis by George Galster found that high-crime, high-poverty neighborhoods with visible deterioration can increase stress, which affects parenting and thereby harms children. He also found that health impacts of neighborhood conditions extend beyond the usual suspects of environmental hazards. Neighborhoods cut off from jobs and quality public services affect residents’ health, employment, and educational status.

The Great Recession widened neighborhood differences in unemployment rates, according to research by Ann Owens and Robert Sampson. Neighborhood poverty and vacancy rates were also exacerbated by the recession, but the effect was not as large as for unemployment. Minority and immigrant neighborhoods were hit hardest.

Solutions Built on Evidence

Economists and sociologists say this new research will change the discussion around the importance of where children grow up. This is true. But there is much we already know that points us towards how we might ensure that more children have the experience of growing up in low-poverty, high-opportunity areas that show the greatest potential for upward economic mobility.

An important question this new research prompts is: How do we create neighborhoods of opportunity or make it so that more families can move to areas where they can experience such upward mobility?

It turns out there is solid evidence to inform how we might do either.

1. Provide intensive supports to an entire community for lasting results without families having to move. Community-wide supports can yield lasting effects on earnings—without uprooting families, according to research by James Riccio of MDRC. The Jobs-Plus demonstration, which is being revived as a HUD pilot due to evidence of its impacts, changed the rent rules at participating public housing developments and added an on-site job center and peer support program. After the four year intervention was over, residents in the Jobs-Plus sites had 14% higher incomes than those living in comparable public housing developments that did not receive intensive supports. After seven years, the earnings difference between developments has grown to 16% – despite the job support program having ended three years earlier. Jobs-Plus appears to have changed the trajectory of these communities.

2. Increase residential density in the suburbs to boost low-income social mobility without negative effects on the community. Moving into affordable housing developments created as a result of state “fair share” policies – which prohibit the use of zoning codes to restrict higher density, affordable housing – shows significant positive results. Sociologist Doug Massey conducted a systematic evaluation of the effects of the Ethel Lawrence Homes in Mt. Laurel, New Jersey, an affluent suburb of Philadelphia. It was developed as a result of a state Supreme Court decision that all New Jersey municipalities have an affirmative obligation to meet their “fair share” of affordable housing in a region. Residents who moved into these homes experienced sharp reductions in exposure to violence and disorder and other negative life events; decreased stress; increased employment and earnings; and decreased welfare receipt. For children, the move resulted in increased school quality, reduced exposure to within school violence and disorder, and a more conducive study environment. Each in turn produced higher grades. These gains were accomplished without imposing significant costs on residents or economic costs on project neighbors or the community in general.

3. Expand poor families’ access to low-poverty areas and schools through inclusionary housing. These policies require or encourage private developers to dedicate a share of homes in a development to be sold or rented at below-market rates. Research by Heather Schwartz of the Rand Corporation conducted in Montgomery County, MD shows that students whose families rented an affordable home in such a development did significantly better than those who lived in traditional public housing and attended a higher poverty school. Mirroring the duration effects of Chetty and his colleagues she finds that by the end of elementary school, the large achievement gap between children living in scattered site homes who attended low-poverty schools and their non-poor classmates was cut by half for math and by one-third for reading.

3. Create mixed-income developments to strengthen local opportunities for children. Whether through inclusionary housing or other approaches, mixed-income communities have been proposed as a pathway to address the harms of concentrated poverty and improve economic mobility. Research by Mark Joseph and Robert Chaskin as well as by Laura Tach has shown that social networks often remain very isolated within income groups, despite regular brief interactions in a mixed-income community. In a commentary for Cityscape, Joseph noted that revitalizing a distressed community in the comprehensive manner proposed by the Choice Neighborhoods Initiative “will take careful upfront strategic design; dedicated and vigilant technical assistance; and keen accountability from funders, partners, and constituencies.” These lessons are likely to hold true whether the place-based intervention is large or small. Chetty’s work suggests another promising lesson: If we think the evaluation is done before the children are grown, we may miss the most lasting results.

An abundance of research shows that neighborhoods offer our children a ladder to the American dream of economic mobility, or they put children on a path to generational poverty. Neighborhood quality and economic mobility are yet one more way that housing matters.


Image: The Box District, courtesy of The Neighborhood Developers