This paper estimates neighborhood effects on adult labor market outcomes using the Moving to Opportunity (MTO) housing mobility experiment. We propose and implement a new strategy for identifying transition-specific effects that exploits identification of the unobserved component of a neighborhood choice model. Estimated Local Average Treatment Effects (LATEs) are large, result from moves between the first and second deciles of the national distribution of neighborhood quality, and pertain to a subpopulation of nine percent of program participants.

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Most studies of the persistent gap in wealth between whites and blacks have investigated the large gap in income earned by the two groups. Those studies generally concluded that the wealth gap was “too big” to be explained by differences in income. We study the issue using a different approach, capturing the dynamics of wealth accumulation over time. We find that the income gap is the primary driver behind the wealth gap and that it is large enough to explain the persistent difference in wealth accumulation. The key policy implication of our work is that policies designed to speed the closing of the racial wealth gap would do well to focus on closing the racial income gap.

Redshirting, Compulsory Schooling Laws, and Educational Attainment Dionissi Aliprantis A wide literature uses date of birth as an instrument to study the causal effects of educational attainment. This paper shows how parents delaying their children's initial enrollment in kindergarten, a practice known as redshirting, can make estimates obtained through this identifi cation framework all but impossible to interpret. A latent index model is used to illustrate how the monotonicity assumption in this framework is violated if redshirting decisions are made in a setting of essential heterogeneity. Empirical evidence is presented from the ECLS-K data set that favors this scenario; redshirting is common and heterogeneity in the treatment effect of educational attainment is likely a factor in parents' redshirting decisions.

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March 2012* When Should Children Start School? Dionissi Aliprantis Kindergarten-entrance-age effects are diffi cult to identify due to the nonrandom allocation of entrance-age and simultaneous relative-age effects. This paper presents evidence that instrumental variable frameworks do not identify age effects for the youngest children of a cohort using the results of statistical tests for essential heterogeneity in initial enrollment decisions. Restricting attention to the oldest children in a cohort yields a sample with quasirandom variation in entrance and relative ages. This variation is used to identify the parameters of education production functions in which both entrance and relative ages are inputs for achievement. Estimates of entrance-age parameters from the ECLS-K data set are positive, large, and persist until the spring of third grade. Relative-age parameters are smaller, tend to be negative, and fade-out for math achievement by third grade. For the average child in our sample these estimates imply that both an earlier entrance cutoff date and an earlier birthdate will increase achievement if the child remains eligible. There is extreme heterogeneity in effects by gender and home environment, and these results are likely to be the most relevant for policy.

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The Moving to Opportunity (MTO) experiment randomly assigned housing vouchers that could be used in low-poverty neighborhoods. Consistent with the literature, I fi nd that receiving an MTO voucher had no effect on outcomes like earnings, employment, and test scores. However, after studying the assumptions identifying neighborhood effects with MTO data, this paper reaches a very different interpretation of these results than found in the literature. I fi rst specify a model in which the absence of effects from the MTO program implies an absence of neighborhood effects. I present theory and evidence against two key assumptions of this model: That poverty is the only determinant of neighborhood quality, and that outcomes only change across one threshold of neighborhood quality. I then show that in a more realistic model of neighborhood effects that relaxes these assumptions, the absence of effects from the MTO program is perfectly compatible with the presence of neighborhood effects. This analysis illustrates why the implicit identifi cation strategies used in the literature on MTO can be misleading.