The scale and nature of neighborhood effects on children

Abstract

Research documents a causal impact of place on children’s long-run outcomes. However, little is known about the scale at which neighborhood effects operate, and thus what it is about neighborhoods that matters. By using the quasi-random assignment of public housing along with administrative data from Denmark, we get inside the “black box” of neighborhood effects by defining neighborhoods using various characteristics and scales. Results indicate effects on education and earnings are large but local, while effects on drug possession operate on a broader scale. Additionally, unemployment and education are better predictors of outcomes than neighborhood income.