The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects*

Chetty, Raj; Hendren, Nathaniel

doi:10.1093/qje/qjy007

Cited by 710 publications

(389 citation statements)

References 34 publications

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“…Studies of the Moving to Opportunity experiment, for example, find that young children earn more in adulthood if they live in lower poverty areas as children (Chetty, Hendren and Katz (2015)), and that adults are in better health after they move (Ludwig et al (2013)). There also appears to be very different levels of intergenerational income mobility across areas (Chetty et al (2014)), and there is some evidence that living in particular areas leads to worse outcomes in adulthood (Chetty and Hendren (2017)). …”

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confidence: 99%

Local Ties in Spatial Equilibrium

Zabek¹

2018

Preprint

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People who live in declining areas are more likely to have been born nearby, which implies that they have idiosyncratic ties to where they live. Labor demand shocks to places where people have higher levels of these local ties, proxied by their birth places, lead to less migration and larger movements into and out of the labor market. A model of spatial equilibrium that includes a distribution of workers' preferences for living in their birth places matches these facts and suggests further implications. Declines in local productivity lead to lower migration elasticities and larger declines in real wages after further declines in productivity. Population can take generations to adjust, since ties can only be reallocated slowly. Across a wide class of models, lower migration elasticities make subsidies to local areas more efficient, since they change fewer people's locations. Local subsidies are more efficient in declining areas, where they are the most common.Keywords: Migration, Local Labor Markets, Demography, Growth, Decline JEL Numbers: J61, R23, E62, R58, H31, D61, J11 * University of Michigan Department of Economics, zabek@umich.edu. I owe particular thanks to my advisors, Dominick Bartelme, John Bound, Joshua Hausman, and Matthew Shapiro, for patience, perspective, knowledge, and encouragement. Helpful comments from a number of people were also invaluable. These people include, but are not limited to: Aditya Aladangady, Martha Bailey, C. Hoyt Bleakley, Lawrence Blume, Charles Brown, Patrick Coate, Ben Farber, Pamela Giustinelli, David Green, Chris House, Pawel Krolikowski, John Laitner, David Lam, Andrei Levchenko, Corinne Low, Jessica Ott, Linda Tesar, Michel Serafinelli, Robert Schoeni, Christopher Smith, Melvin Stephens, Bryan Stuart, Robert Willis, Abigail Wozniak, and seminar participants at the University of Michigan, the University of Pennsylvania SSPF, H2D2 research day at the University of Michigan, the Population Association of America, the Midwest Economics Association, the Midwest Macro Association, the Urban Economics Association, the US Census Bureau, the 2017 SOLE meetings, the Barcelona GSB Summer Forum, The Federal Reserve Bank of Cleveland, Cleveland State University, the Upjonh Institute, the SPP1764 conference at the German Bundesagentur fr Arbeit, and several potential employers. I am grateful to David Dorn for sharing data and code both via his website and through personal correspondence. The research was supported in part by NICHD center grant (R24 HD041028) to the Population Studies Center at the University of Michigan and through computational resources and services provided by Advanced Research Computing at the University of Michigan. Earlier versions of this paper circulated as "Population growth, decline, and shocks to local labor markets" and "Implications of local ties in spatial equilibrium."In spatial equilibrium, the marginal person will be equally well off, no matter where she lives (Rosen (1979) and Roback (1982)). Most people are not marginal, however. Kennan and...

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confidence: 99%

Local Ties in Spatial Equilibrium

Zabek¹

2018

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“…11 The problem in (1) also abstracts from income risk. In the next section we write a multi-period extension with uncertainty about the realization of the income process.…”

Section: Asset and Location Choicesmentioning

confidence: 99%

Location as an Asset

Bilal¹,

Rossi‐Hansberg²

2018

Preprint

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The location of individuals determines their job opportunities, living amenities, and housing costs. We argue that it is useful to conceptualize the location choice of individuals as a decision to invest in a 'location asset'. This asset has a cost equal to the location's rent, and a payo¤ through better job opportunities and, potentially, more human capital for the individual and her children. As with any asset, savers in the location asset transfer resources into the future by going to expensive locations with good future opportunities. In contrast, borrowers transfer resources to the present by going to cheap locations that o¤er few other advantages. As in a standard portfolio problem, holdings of this asset depend on the comparison of its rate of return with that of other assets. Di¤erently from other assets, the location asset is not subject to borrowing constraints, so it is used by individuals with little or no wealth that want to borrow. We provide an analytical model to make this idea precise and to derive a number of related implications, including an agent's mobility choices after experiencing negative income shocks. The model can rationalize why low wealth individuals locate in low income regions with low opportunities even in the absence of mobility costs. We document the investment dimension of location, and con…rm the core predictions of our theory with French individual panel data from tax returns.

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“…A number of studies have estimated large positive benefits for low-income families of moving to better neighborhoods, as measured by lower crime rates, better school quality, or more employment opportunities (recent examples include Chetty, Hendren and Katz, 2016;Chetty and Hendren, forthcoming;Chyn, 2017). Despite these large apparent benefits, many low-income families do not choose to move neighborhoods even when an equally affordable alternative is available to them.…”

Section: Moving To a New Neighborhoodmentioning

confidence: 99%

Rationalizations and Mistakes: Optimal Policy with Normative Ambiguity

Goldin¹,

Reck

2018

AEA Papers and Proceedings

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Behavior that appears to violate neoclassical assumptions can often be rationalized by incorporating an optimization cost into decision-makers' utility functions. Depending on the setting, these costs may reflect either an actual welfare loss for the decisionmakers who incur them or a convenient (but welfare irrelevant) modeling device. We consider how resolution of this normative ambiguity shapes optimal policy in a number of contexts, including default options, inertia in health insurance plan selection, take-up of social programs, programs that encourage moving to a new neighborhood, and tax salience.

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The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects*

Cited by 710 publications

References 34 publications

Local Ties in Spatial Equilibrium

Local Ties in Spatial Equilibrium

Location as an Asset

Rationalizations and Mistakes: Optimal Policy with Normative Ambiguity

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