Can Escaping from Poor Neighborhoods Increase Employment and Earnings?

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Abstract

Is there a correlation between exposure to racially integrated, low poverty areas and employment outcomes? Does moving from a poor, inner city neighborhood to a less poor area bring greater proximity to job opportunities, or contacts with new networks of neighbors who might steer movers to jobs? Does living in a community where more people work increase motivation to work or to increase income? In examining these questions for the MTO experimental movers, this brief finds that factors in addition to where people live affect their employment and earnings.

Introduction

As America engages in a new round of policy debate about how to tackle economic inequality and the challenges of staying competitive in a changing global economy, policymakers and researchers continue to examine whether place—in particular, poor, inner-city neighborhoods—affects employment and self sufficiency. “Geography of opportunity” is vital but too often oversimplified or misunderstood.

Research on the effects of programs that help low-income and minority families move to better neighborhoods—an approach known as “assisted housing mobility”—has suggested that these efforts can improve the life outcomes of low income, mostly minority adults and their children. In 1994, encouraging results from a housing desegregation program known as Gautreaux (Rubinowitz and Rosenbaum 2000) spurred the federal government to launch the Moving to Opportunity experiment (MTO) in five metropolitan areas—Baltimore, Boston, Chicago, Los Angeles, and New York (see text box on page 11).

In MTO, just over 4,600 very low income families who were residents of public housing (Orr et al. 2003) were randomly assigned to one of three treatment groups: a control group, a Section 8 comparison group, or an experimental group (see text box on page 11 for descriptions). At baseline, only about one-quarter of the adults enrolled in MTO were working; most were on welfare (Orr et al. 2003). Although MTO’s design did not explicitly address barriers to employment, previous research suggested that the demonstration would lead to higher employment rates and earnings among participants. Specifically, the expectation was that MTO participants might gain access to jobs by moving closer to employment centers, developing more useful job networks with more advantaged neighbors, or being motivated by an environment with stronger work norms. Past research also suggested that living in safer neighborhoods could lead to reduced stress and anxiety, thereby enabling people to begin work or training activities. At the same time, by moving, families might lose access to social ties that are often sources of child care, transportation, and other work supports.

The MTO Interim Impacts Evaluation, a follow-up survey of the entire sample of MTO families at all five sites, was conducted in 2002, about five years after the MTO families moved (Orr et al. 2003).This brief reviews findings on MTO’s impacts on employment to date and findings from the Three-City Study of Moving to Opportunity (see text box on page 11). The study was designed to examine key puzzles that emerged from the MTO Interim Impacts Evaluation by focusing on causal mechanisms through a mixed-method approach, combining qualitative interviews, ethnographic fieldwork, and analysis of census and administrative data.

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The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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