RAJ CHETTY
Harvard University

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Co-authored with John Friedman, Nathaniel Hendren, Maggie R. Jones, and Sonya R. Porter

Originally published as National Bureau of Economic Research (NBER) Working Paper No. 25147 (October 2018)

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ABSTRACT: WE CONSTRUCT A PUBLICLY AVAILABLE ATLAS of children’s outcomes in adulthood by Census tract using anonymized longitudinal data covering nearly the entire U.S. population.  For each tract,  we  estimate children’s earnings distributions, incarceration rates, and other outcomes in adulthood by parental income, race, and gender.  These estimates allow us to trace the roots of outcomes such as poverty and incarceration back to the neighborhoods in which children grew up.  We find that children’s outcomes vary sharply across nearby tracts:  for children of parents at the 25th percentile of the income distribution,  the standard deviation of mean household income at age 35 is $5,000 across tracts within counties.  We illustrate how these tract-level data can provide insight into how neighborhoods shape the development of human capital and support local economic policy using two applications.

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First, we show that the estimates permit precise targeting  of  policies  to  improve  economic  opportunity  by  uncovering  specific  neighborhoods where  certain  subgroups  of  children  grow  up  to  have  poor  outcomes.   Neighborhoods  matter at a very granular level:  conditional on characteristics such as poverty rates in a child’s own Census tract,  characteristics of tracts that are one mile away have little predictive power for a  child’s  outcomes.   Our  historical  estimates  are  informative  predictors  of  outcomes  even  for children  growing  up  today  because  neighborhood  conditions  are  relatively  stable  over  time.

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Second, we show that the observational estimates are highly predictive of neighborhoods’ causal effects, based on a comparison to data from the Moving to Opportunity experiment and a quasi-experimental research design analyzing movers’ outcomes.  We then identify high-opportunity neighborhoods that are affordable to low-income families,  providing an input into the design of affordable housing policies.  Our measures of children’s long-term outcomes are only weakly correlated with traditional proxies for local economic success such as rates of job growth, showing that the conditions that create greater upward mobility are not necessarily the same as those that lead to productive labor markets.

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Click here to full paper (PDF)

Click here to view the Opportunity Atlas

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Raj Chetty will speak at the Reverberations of Inequality Opening Conference, delivering the Keynote Address, "Improving Equality of Opportunity in America: New Insights from Big Data," September 20, 1:30-3:00 pm, 3501 Sansom Street. Click here to register