Identifying Long-Run Neighborhood Effects via Race-Based Neighborhood Sorting

Children’s adult outcomes are influenced by both their parents’ socioeconomic status (SES) and the SES of the neighborhood where they grew up. We explicitly distinguish between these factors to identify long-run neighborhood effects. We estimate an ordered probit model of neighborhood choice and use it to infer how population shares of parental SES in each neighbor hood vary along both observed and unobserved dimensions. We then regress the average observed outcomes in neighborhoods on these population shares to identify potential outcomes.

Using race based neighborhood sorting as an instrument, we estimate that about half of recent racial inequality in intergenerational mobility is explained by residential segregation.

Joint with Daniel Hartley and Chris Muris

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