The Neighborhood Effect: How Place Impacts Upward Mobility

As discussed earlier this week in the Brookings Institution Metropolitan Policy Program blog, Jonathan Rothwell highlights current thinking regarding the influences of upward mobility. Although most credit genes as a main factor, "the most comprehensive study so far finds that genetic differences can explain only about one month of the gap in educational attainment across thousands of individuals. Economists have found that inherited wealth is far more important."

Indeed, Rothwell points out how "[the] effect of neighborhood income is 50 to 66 percent of the parental income effect, so that growing up in a poor neighborhood would wipe out much of the advantage of growing up in a wealthy household. Lifetime earnings are $900,000 (or $730,000 in net present value terms) higher for those raised in top quintile neighborhoods than for individuals from bottom quintile neighborhoods."

In the case of education's role in economic opportunity, Rothwell writes, "[we] know school quality is highly correlated with neighborhood income, and experimental evidence shows that poor children have higher cognitive scores and lifetime earnings when they attend good schools. Interesting quasi-experimental evidence from the random assignment of refugees shows that those who grow up in better neighborhoods do better at school. Given that inequality is partly inherited via neighborhoods, we need to make them more equitable and less determinative in accessing important public goods like quality education."