A city is not a single, unitary thing, but a collection of neighborhoods. And we know that the outcomes among children who grow up in poor neighborhoods, those with under-performing schools, under-prepared peers and less access to high-quality libraries or museums, are often very different than those who grow up in wealthier areas. These early differences can not only contribute to inequality in terms of wages and income, but also what Stanford University economist Rebecca Diamond calls “inequality of well-being,” where neighborhoods that house high shares of high-skilled workers not only have more money, but also better amenities, like grocery stores and schools. Diamond’s well-being inequality gap, she finds, is 20 percent higher than what can be explained by the wage gap between college and high school grads.
This is what social scientists have dubbed the “neighborhood effect,” and two recent studies give us a better understanding of exactly how it works.
The first [PDF], by Princeton University sociologist Douglas Massey and Jonathan Rothwell, an economist with the Brookings Institution’s Metropolitan Policy Program, examines how the neighborhood in which one lives for the first 16 years of life affects future income between the ages of 30 and 44. The study, which was published recently in the journal Economic Geography*, used data from the Panel Study of Income Dynamics collected by the University of Michigan’s Institute for Social Research, which has tracked a nationally representative sample of individuals and families since 1968.