Where Poor Kids Grow Up Makes A Huge Difference

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In two new studies, Harvard economist Raj Chetty and his colleagues found that where poor kids grow up has a huge effect on how much money they earn as adults.

In one study, families living in public housing were randomly selected to be eligible for housing vouchers that required them to move to low poverty neighborhoods. Kids whose families received the vouchers grew up to earn significantly more than those whose families remained in public housing.

In a second study, Chetty and his colleagues looked at data for millions of families who moved from one county to another. Based on this data, they were able to estimate how much where poor kids grow up affects their income as adults.
 

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An Atlas of Upward Mobility Shows Paths Out of Poverty

http://www.nytimes.com/2015/05/05/u...atters-an-economists-view.html?abt=0002&abg=0

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In the wake of the Los Angeles riots more than 20 years ago, Congress created an anti-poverty experiment called Moving to Opportunity. It gave vouchers to help poor families move to better neighborhoods and awarded them on a random basis, so researchers could study the effects.

The results were deeply disappointing. Parents who received the vouchers did not seem to earn more in later years than otherwise similar adults, and children did not seem to do better in school. The program’s apparent failure has haunted social scientists and policy makers, making poverty seem all the more intractable.

Now, however, a large new study is about to overturn the findings of Moving to Opportunity. Based on the earnings records of millions of families that moved with children, it finds that poor children who grow up in some cities and towns have sharply better odds of escaping poverty than similar poor children elsewhere.


The feelings heard across Baltimore’s recent protests — of being trapped in poverty — seem to be backed up by the new data. Among the nation’s 100 largest counties, the one where children face the worst odds of escaping poverty is the city of Baltimore, the study found.

The city is especially harsh for boys: Low-income boys who grew up there in recent decades make roughly 25 percent less as adults than similar low-income boys who were born in the city and moved as small children to an average place.

Beyond Baltimore, economists say the study offers perhaps the most detailed portrait yet of upward mobility — and the lack of it. The findings suggest that geography does not merely separate rich from poor but alsoplays a large role in determining which poor children achieve the so-called American dream.

How neighborhoods affect children “has been a quandary with which social science has been grappling for decades,” said David B. Grusky, director of the Center on Poverty and Inequality at Stanford University, who was not involved in the research. “This delivers the most compelling evidence yet that neighborhoods matter in a really big way.”

Raj Chetty, one of the study’s authors, has presented the findings to members of the Obama administration, as well as to Hillary Rodham Clinton and Jeb Bush, both of whom have signaled that mobility will be central themes of their 2016 presidential campaigns. After more than 15 years of mostly mediocre economic growth and rising income inequality, many families say they are frustrated and anxious about trying to get ahead.

“The data shows we can do something about upward mobility,” said Mr. Chetty, a Harvard professor, who conducted the main study along withNathaniel Hendren, also a Harvard economist. “Every extra year of childhood spent in a better neighborhood seems to matter.”

The places where poor children face the worst odds include some — but not all — of the nation’s largest urban areas, like Atlanta; Chicago; Los Angeles; Milwaukee; Orlando, West Palm Beach and Tampa in Florida; Austin, Tex.; the Bronx; and the parts of Manhattan with low-income neighborhoods.

All else equal, low-income boys who grow up in such areas earn about 35 percent less on average than otherwise similar low-income children who grow up in the best areas for mobility. For girls, the gap is closer to 25 percent.

Many of these places have large African-American populations, and the findings suggest that race plays an enormous but complex role in upward mobility. The nation’s legacy of racial inequality appears to affect all low-income children who live in heavily black areas: Both black and white children seem to have longer odds of reaching the middle class, and both seem to benefit from moving to better neighborhoods.
 
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The places most conducive to upward mobility include large cities — San Francisco, San Diego, Salt Lake City, Las Vegas and Providence, R.I. — and major suburban counties, such as Fairfax, Va.; Bergen, N.J.; Bucks, Pa.; Macomb, Mich.; Worcester, Mass.; and Contra Costa, Calif.

These places tend to share several traits, Mr. Hendren said. They have elementary schools with higher test scores, a higher share of two-parent families, greater levels of involvement in civic and religious groups and more residential integration of affluent, middle-class and poor families.

For low-income families, a home in places with these characteristics is often a financial stretch. Rachelle Hawkins, a 32-year-old single mother in California, rented an apartment in Contra Costa late last year with help from a Contra Costa nonprofit called Shelter, Inc., which paid her first month’s rent. She moved from a gritty neighborhood near Oakland and was homeless for a time. She makes about $29,000 as a customer-service agent in online banking and faces an annual rent bill of almost $17,000.

But she thinks the burden is worth it for her children, who are 4 and 6. “I don’t think my kids are going to remember what we went through,” Ms. Hawkins said. “They are absolutely better off, just because of the environment.”

In addition to studying the outcomes of more than five million children who moved, Mr. Chetty and Mr. Hendren also revisited the subjects of the Moving to Opportunity experiment. Working with Lawrence Katz, one of the original researchers to study the program, they analyzed more recent, richer data — and concluded that children who moved before they were teenagers did indeed benefit economically. (The original study had found health benefits for both younger and older children.)

In both studies, the younger children were when they moved, the better they did. Children were less likely to become single parents when they grew up, were more likely to go to college and to earn more. The original research had not been able to follow the economic outcomes of younger children, because not enough time had passed, Mr. Katz said.

Still, the more extensive nationwide data on moving found that older children were also affected by their neighborhood. The effect was what statisticians call linear: Each additional year in a different place had roughly the same average effect on a child’s adult earnings. A teenager’s year in a better neighborhood mattered as much as a 9-year-old’s year — but 9-year olds still had their teenage years in front of them.

Some economists who have seen the new study say that it argues for a new approach to housing policy. Current policy often forces the parents of young children onto waiting lists for housing vouchers. It also gives tax incentives to developers who build in poor neighborhoods, rather than rewarding those who build affordable housing in areas that seem to offer better environments.

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In an interview Friday, Julián Castro, the secretary of Housing and Urban Development, said he was excited by the new data. Mr. Castro said his department had been planning to reallocate funding, so that some people moving to more expensive neighborhoods would receive larger vouchers. Currently, the value of vouchers tends to be constant across a metropolitan area.

The large county on the other end of the spectrum from Baltimore, with the best odds of escaping poverty, is DuPage County, Ill., west of Chicago. It contains suburbs where the schools are considered better and where housing costs more than in Chicago and some close-in suburbs.

In 2012, Latonya Polk decided to move there with her son and daughter, then 16 and 15. Her husband had been fatally shot on the front lawn of their apartment outside Chicago in 2011, in a crime that remains unsolved, she said.

Briana, her daughter, was hesitant about leaving her friends, but Mrs. Polk insisted, saying they could still visit them. “I knew absolutely it would mean better possibilities for my kids,” she said.

Mrs. Polk earns about $40,000 a year at a company that helps clear goods through customs. She has been able to afford the move by living in a cramped $1,025-a-month, one-bedroom apartment — and with help from a county program that gives them about $2,000 a year toward living expenses.

Her son, Jovan, graduated from high school last year and is now working, while Briana will graduate this spring. Both plan to enroll in community college in the next year.

Although most places with better odds of escaping poverty have higher rent, the researchers did identify some counties as “upward-mobility bargains.” These include Putnam County, N.Y.; parts of the Pittsburgh and Altoona areas in Pennsylvania; and, if only relative to surrounding areas, Contra Costa.

The study defined low income as the 25th percentile of the income distribution — a household earning less than three-quarters of other households nationally, or about $30,000 a year for families with children. But the analysis covered the full income distribution, and the geographic patterns at the 25th percentile were very similar to those for poorer and somewhat less poor households.

The main innovation of the new paper — part of the Equality of Opportunity Project, involving multiple researchers — is its focus on children who moved. Doing so allows the economists to ask whether the places themselves actually affect outcomes. The alternative is that, say, Baltimore happens to be home to a large number of children who would struggle no matter where they grew up.

The data suggests otherwise. The easiest way to understand the pattern may be the different effects on siblings, who have so much in common. Younger siblings who moved from a bad area to a better one earned more as adults than their older siblings who were part of the same move. The particular environment of a city really does seem to affect its residents.

The data does not answer the question of whether the factors that distinguish higher-mobility places, like better schools and less economic segregation, are causing the differences — or are themselves knock-on effects of other, underlying causes. “We still need clarity on that,” Mr. Grusky, the Stanford professor, said.

From her perspective, Ms. Hawkins, the Contra Costa resident, said that the mixing of people from different social classes did make a difference.

“It’s all spread out here,” she said. In her old home in San Leandro, Calif., entire neighborhoods had high unemployment and crime, which led some people who did have jobs to flee, causing a downward spiral. “You don’t want to put your kid in harm’s way. That’s just extra stress.”

For all the benefits that moves can bring, they are not a solution to poverty, said people who have seen the new paper as well as the researchers themselves. Finding ways to improve those neighborhoods, for people who cannot or do not want to move, is also important, researchers and policy makers said.

“We can’t walk away from them,” Mr. Castro, the housing secretary, said. “We need a two-pronged approach.”
 

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The Best and Worst Places to Grow Up: How Your Area Compares

http://www.nytimes.com/interactive/...2000&bicmet=1419773522000&_r=0&abt=0002&abg=0

^^^^ interactive map that allows you to compare and contrast, "how much extra money a county causes children in poor families to make, compared with children in poor families nationwide." So for example, when I typed in Nassau County, I got:

Nassau County is pretty bad for income mobility for children in poor families. It is better than about 34 percent of counties.
Location matters – enormously. If you’re poor and live in the New York area, it’s better to be in Putnam County than in Manhattan or the Bronx. Not only that, the younger you are when you move to Putnam, the better you will do on average. Children who move at earlier ages are less likely to become single parents, more likely to go to college and more likely to earn more.

Every year a poor child spends in Putnam County adds about $150 tohis or her annual household income at age 26, compared with a childhood spent in the average American county. Over the course of a full childhood, which is up to age 20 for the purposes of this analysis, the difference adds up to about $3,100, or 12 percent, more in average income as a young adult.

These findings, particularly those that show how much each additional year matters, are from a new study by Raj Chetty and Nathaniel Hendren that has huge consequences on how we think about poverty and mobility in the United States. The pair, economists at Harvard, have long been known for their work on income mobility, but the latest findings go further. Now, the researchers are no longer confined to talking about which counties merely correlate well with income mobility; new data suggests some places actually cause it.

Consider Nassau County, N.Y., the focus of this article. (Feel free to change to another place by selecting a new county on the map or using the search boxes throughout this page.)

It’s below average in helping poor children up the income ladder. It ranks 852nd out of 2,478 counties, better than about 34 percent of counties. It is relatively worse for poor girls than it is for poor boys.

In some places, the new estimates of mobility conflict with earlier estimates. For example, previous estimates suggested that New York City was a good place for lower-income children to grow up: Children raised in lower-income families in New York had above-average outcomes in adulthood.

But New York appeared above average in part because it has a large number of immigrants, who have good rates of upward mobility no matter where they live: Nothing about New York in particular caused these children to do better.

To remove variation that was simply caused by different types of people living in different areas, Mr. Chetty and Mr. Hendren based the latest estimates on the incomes of more than five million children who moved between areas when they were growing up in the 1980s and 1990s. These estimates are causal: They suggest moving a given child to a new area would in fact cause him or her to do better or worse.

In the new estimates, Manhattan ranks among the worst counties in the country for girls from lower-income families.

Here, better or worse is measured by the household incomes of children in early adulthood. This makes New York look worse than it would if individual incomes were used, because it, along with Northern California, has some of the lowest marriage rates in the country. Manhattan is actually better than most of the country at raising theindividual incomes of poor girls. Marriage rates, too, are strongly affected by where children grow up.
 

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Why the New Research on Mobility Matters: An Economist’s View

http://www.nytimes.com/2015/05/05/u...atters-an-economists-view.html?abt=0002&abg=0

Hundreds of studies have demonstrated that the odds of economic success vary across neighborhoods. The far more difficult question is whether that’s because neighborhoods nurture success (or failure), or whether they just attract those who would succeed (or fail) anyway.

A new study by the Harvard economists Raj Chetty and Nathaniel Hendren, when read in combination with an important study they wrote with Lawrence Katz, makes the most compelling case to date that good neighborhoods nurture success. (The Upshot has just published a package of articles and interactives on the study.)


Let me be upfront about my own reading: These two new studies are the most powerful demonstration yet that neighborhoods — their schools, community, neighbors, local amenities, economic opportunities and social norms — are a critical factor shaping your children’s outcomes. It’s an intuitive idea, although the earlier evidence for it had been surprisingly thin. As Sean Reardon, a professor of education and sociology at Stanford, said of the study, “I think it will change some of the discussion around how where children grows up matters.”

Why is the new research so important?

I will start with the smaller of their two studies, which is the very rare case in which the federal government ran an experiment to test whether a policy idea actually worked. In the Moving to Opportunity experiment in the mid-to-late 1990s, 4,600 families living in public housing entered a lottery in which the winners were offered a voucher that enabled them to move to better neighborhoods.

Because any differences between lottery winners and losers are random, many social scientists view experiments like this as the gold standard for evidence. Consequently, the results from this experiment have been closely watched. Early findings had been disappointing, with no effect on the employment and earnings of parents, some positive effects seen on their physical and mental health, and few notable effects on their children. But the new studies provide a far more optimistic lens for interpreting this evidence.

Those earlier analyses grouped children who moved to a neighborhood as toddlers with those who moved in their late teens. So comparing all of the children whose parents won the lottery with all of those whose parents lost showed small effects. Yet if what matters are years of exposure to a good neighborhood — a hypothesis strongly suggested by the second of these two studies — then the effects might be very different, as those who moved as toddlers enjoyed most of their childhood in better neighborhoods, while those who moved as teens received few such benefits yet still had to deal with the disruption of moving.

Armed with this hypothesis and also newer data on the longer-run outcomes of these children, Mr. Chetty, Mr. Hendren and Mr. Katz reanalyzed the outcomes of the same families. (Full disclosure: Lawrence Katz was my Ph.D. adviser.)

And the findings are remarkable. In particular, the previous results actually hide two quite distinct findings, one positive and one negative. The children who moved when they were young enjoyed much greater economic success than similarly aged children who had not won the lottery. And the children who moved when they were older experienced no gains or perhaps worse outcomes, probably the result of a disruptive move, paired with few benefits from spending only a short time in a better neighborhood.

The sharpest test comes from those who won an experimental housing voucher that could be used only if they moved to low-poverty areas. Here the findings are striking, as those who moved as a result of winning this voucher before their teens went on to earn 31 percent more than those who did not win the lottery. They are also more likely to attend college. Other families were awarded Section 8 housing vouchers, which subsidize renting a house or apartment. But because they did not require the winners to move to better parts of the city, people typically moved to neighborhoods that were better but perhaps by only half as much. As a result, the eventual income gains to the preteen children who won this the lottery were about half as large.

But those who were teens when their families won the lottery — the typical child was 15 — saw few years in their better neighborhoods and also had to deal with the disruption of moving. A result is that their incomes were 13 to 15 percent lower, although there is sufficient uncertainty around this estimate that this decline might merely be due to chance. It is a cruel fact that the waiting lists for public housing vouchers can mean that the families wanting to move when their children are young enough to benefit will get that opportunity only several years later when the benefits are small or nonexistent.

The girls raised in better neighborhoods are also more likely to grow up to marry, and when they have children, are more likely to maintain a relationship with the father. They are also more likely to live in better neighborhoods as adults. This suggests that the next generation — the grandchildren of the winners of this lottery — are more likely to be raised by two parents, to enjoy higher family incomes and to spend their entire childhood in better neighborhoods. That is, the gains from this policy experiment are likely to persist over several generations.

All told, this re-analysis transforms what was previously seen as influential evidence that neighborhoods are unimportant into the more nuanced finding that moving while young can be tremendously beneficial. Indeed, the net present value of the extra earnings that will eventually accrue to a child who moved at age 8 is $99,000, meaning that for a family with two children, the program yields $198,000 in extra earnings.

The extra tax that these two children will eventually pay is probably $22,000, more than enough to offset the extra cost of the voucher program, relative to the alternative of public housing.

It is rare to see social science overturn old beliefs so drastically. It happened because these scholars returned to an old experiment with a fresh perspective, based on the idea that what matters is how long children are exposed to good or bad neighborhoods. But is this the right perspective?

Here’s where the second study is critical. While the conclusions of the Moving to Opportunity project are based on following only a few thousand families, Mr. Chetty and Mr. Hendren use earnings records to effectively track the careers and neighborhoods of five million people over 17 years.

Instead of contrasting the outcomes of families in different areas — which may simply reflect different families choosing to live in different areas — they can track what happens to families when they move. In fact, their analysis is based on more fine-grained comparisons. In particular, they can track families that moved from, say, Cincinnati to Pittsburgh when their children were young and compare them with families that made the same move, but when their children were a few years older.

Their findings are clear: The earlier a family moved to a good neighborhood, the better the children’s long-run outcomes. The effects are symmetric, too, with each extra year in a worse neighborhood leading to worse long-run outcomes. Most important, they find that each extra year of childhood exposure yields roughly the same change in longer-run outcomes, but that beyond age 23, further exposure has no effect. That is, what matters is not just the quality of your neighborhood, but also the number of childhood years that you are exposed to it.

A crucial advantage of this analysis is that it follows the children through to early adulthood. This matters because a number of recent studies have shown that interventions have effects that might be hard to discern in test scores or behavioral problems, but that become evident in adulthood. The same pattern of years of exposure to good neighborhoods shaping outcomes is also apparent for college attendance, teenage births, teenage employment and marriage.

These findings replicate many of the key insights from the Moving to Opportunity experiment with far greater statistical resolution, which means there is effectively no chance that are simply due to luck.

Mr. Chetty and Mr. Hendren also subject their analyses to more demanding tests. For instance, rather than making comparisons between families that move at different times, they can also make comparisons within the same family, comparing the results for older and younger siblings after a move. And indeed, when a family moves to a better city, the younger sibling — who will experience more years of exposure to a good neighborhood than an older brother or sister — enjoys better long-run outcomes. Again, the younger sibling enjoys a better future in proportion to the extra years of exposure he or she has.

Similar effects are also seen when they analyze what happens when whole communities are displaced after a shock like Hurricane Katrina or the closing of a large plant. If those communities tend to move to better areas, their children’s futures tend to improve.

They also pay special attention to cities that are improving (or declining), and their findings reflect the state of the neighborhood in the years in which the children are actually present, rather than the previous years when parents may have been deciding where to move.

They also explore what happens in those cities where boys tend to do particularly poorly — typically those with more crime, inequality and segregation. When families with a son and a daughter move to these cities, the son’s outcomes worsen relative to his sister. This gap is larger the longer they both spend in that neighborhood.

Each of these analyses is quite persuasive, but none, taken alone, is a slam dunk. It’s a virtual truism that for any interesting empirical finding, there’s some way for an imaginative social scientist to explain it away. But while you may doubt one piece or other of it, it is virtually impossible to dismiss it all.

Sociologists have typically been quicker than economists to embrace the idea that neighborhoods are important. But the relentless accumulation of evidence is now so compelling that I believe it will sustain a new consensus. That consensus, simply stated, is that place matters. This puts the issue of fixing our failing neighborhoods squarely on the political agenda.
 

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Was reading this earlier today, always felt blessed for growing up in NY.
 
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