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May 4, 2015

More evidence from Raj Chetty: neighborhoods matter for economic mobility

May 4, 2015

In recent years, Raj Chetty’s research has highlighted the lack of economic mobility for Americans today and revealed striking differences in mobility based on a person’s place of birth. His latest research focuses on the contribution of neighborhoods to poor children’s economic trajectories, and concludes that moving to a better neighborhood improves educational outcomes, employment, and income.

Chetty used IRS data to track the incomes of children whose families moved, including families who participated in the Moving to Opportunity (MTO) demonstration, which helped poor families move from deeply poor housing projects to low-poverty neighborhoods. Past research has found that MTO families enjoyed significantly better health and mental health than a control group and that those who lived for longer periods in neighborhoods with lower poverty also achieved better outcomes in work and school, as well as in health. Now we know that children who moved from high-poverty to low-poverty neighborhoods before they were teenagers did indeed benefit economically, other things being equal.

We still have a lot to learn about neighborhoods’ effects on a person’s long-term life chances. What neighborhood conditions matter most – crime and violence, failing schools, high poverty and joblessness? But we know enough to confidently conclude that living in better neighborhoods improves kids’ long-term life chances.

Almost 4 million poor children—most of whom are children of color—are growing up in high-poverty urban neighborhoods. So tackling neighborhood poverty and distress should be a top priority for anyone who cares about income inequality and economic mobility. That means:

  • Eliminating the barriers that block poor families – especially families of color – from finding affordable places to live in opportunity-rich neighborhoods. Tools like inclusionary zoning and fair housing enforcement can open up housing options in good neighborhoods.
  • Using federal housing subsidies to help poor families move to safe neighborhoods with great public schools. The Center on Budget and Policy Priorities recently outlined four evidence-based recommendations for improving neighborhood outcomes in the federal Housing Choice Voucher program.
  • Investing in distressed neighborhoods – where too many poor people are currently trapped – so they too become neighborhoods of opportunity. Across the country, policymakers and practitioners are crafting place-conscious strategies for breaking the cycle of poverty and expanding opportunities for poor families.

None of these is cheap or politically easy. But Chetty’s latest findings drive home their urgency. If we want to be a country where poor kids have a shot at success, we can’t consign them to growing up in neighborhoods of poverty and distress.

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