Neighborhood Effects From Experimental and Quasi-Experimental Studies

Paper Session

Sunday, Jan. 8, 2017 3:15 PM – 5:15 PM

Hyatt Regency Chicago, Crystal A
Hosted By: American Economic Association
  • Chair: Lawrence Katz, Harvard University

Testing for Interference Between Study Subjects in the Moving to Opportunity Study

Jens Ludwig
,
University of Chicago
Lawrence Katz
,
Harvard University
Ronald C. Kessler
,
Harvard University
Jeffrey R. Kling
,
NBER and Congressional Budget Office
Lisa Sanbonmatsu
,
NBER

Abstract

Experimental analyses of neighborhood effects have incorporated an assumption that the random assignment of housing vouchers to some families did not meaningfully affect the potential outcomes of other families studied. In this paper, we use data from the Moving To Opportunity (MTO) housing mobility demonstration to test for the presence of such spillover effects between families. Specifically, we use detailed information from MTO on participant baseline addresses and the random assignment process to examine the potential for violations of the stable unit treatment value assumption that is usually made in studies estimating causal effects. We apply Aronow’s permutation test, which is designed to detect interference between families even in the presence of spatial effects or correlations between a family unit’s outcome and proximity to other units within the study (regardless of treatment status). For a fixed subset of cases, we estimate the correlation between a family’s post randomization outcomes and their proximity at baseline to families assigned to the treatment group. We then compare this statistic with the correlations generated by permuting treatment assignment status for the other families so that there are no spillovers between units by construction. We present the results of the interference tests for economic and health outcomes. To assess the statistical power of this approach in the context of MTO, we conducted a series of simulations using artificial outcomes constructed to exhibit spillover effects. These simulations suggest we have an 80% chance of detecting a true spillover effect of about a tenth of a standard deviation.

Moved to Opportunity: The Long-Run Effect of Public Housing Demolition on Labor Market Outcomes of Children

Eric Chyn
,
University of Virginia

Abstract

This paper provides new evidence on the effects of moving out of disadvantaged neighborhoods on the long-run economic outcomes of children. My empirical strategy is based on public housing demolitions in Chicago which forced households to relocate to private market housing using vouchers. Specifically, I compare adult outcomes of children displaced by demolition to their peers who lived in nearby public housing that was not demolished. Displaced children are 9 percent more likely to be employed and earn 16 percent more as adults. These results contrast with the Moving to Opportunity (MTO) relocation study, which detected effects only for children who were young when their families moved. To explore this discrepancy, this paper also examines a housing voucher lottery program (similar to MTO) conducted in Chicago. I find no measurable impact on labor market outcomes for children in households that won vouchers. The contrast between the lottery and demolition estimates remains even after re-weighting the demolition sample to adjust for differences in observed characteristics. Overall, this evidence suggests lottery volunteers are negatively selected on the magnitude of their children's gains from relocation. This implies that moving from disadvantaged neighborhoods may have substantially larger impact on children than what is suggested by results from voucher experiments where parents elect to participate.

The Impacts of Neighborhoods on Intergenerational Mobility: Childhood Exposure Effects and County-Level Estimates

Raj Chetty
,
Stanford University
Nathaniel Hendren
,
Harvard University

Abstract

We characterize the effects of neighborhoods on children’s earnings and other outcomes in adult-hood by studying more than five million families who move across counties in the U.S. Our analysis consists of two parts. First, we present quasi-experimental evidence that neighborhoods affect intergenerational mobility through childhood exposure effects. In particular, the outcomes of children whose families move to better neighborhoods – as measured by the outcomes of children already living there – improve linearly in proportion to time spent growing up in that area. We distinguish causal neighborhood effects from confounding factors by comparing the outcomes among siblings, studying moves triggered by displacement shocks, and exploiting sharp variation in predicted place effects across birth cohorts, genders, and quantiles. We also document analogous childhood exposure effects for college attendance, teenage birth rates, and marriage rates. Second, we identify the causal effect of growing up in every county in the U.S. by estimating a fixed effects model identified from families who move across counties with children of different ages. We use these estimates to decompose observed intergenerational mobility into a causal and sorting component in each county. For children from families at the 25th percentile of the income distribution, each year of childhood exposure to a one standard deviation (SD) better county increases income in adulthood by 0.5%. Hence, growing up in a one SD better county from birth increases a child’s income by approximately 10%. Low-income children are most likely to succeed in counties with less concentrated poverty, less income inequality, better schools, a larger share of two-parent families, and lower crime rates. Boys’ outcomes vary more across areas than girls, and boys have especially poor outcomes in highly-segregated areas. In urban areas, better areas have higher house prices, but we uncover significant variation in neighborhood quality even conditional on prices.
Discussant(s)
Edward L. Glaeser
,
Harvard University
Brian Jacob
,
University of Michigan
JEL Classifications
  • I3 - Welfare, Well-Being, and Poverty