Where Poor Kids Live Affects Their Chances Of Joining the Middle Class

New Research into Economic Mobility

Where Poor Kids Live Affects Their Chances Of Joining the Middle Class
January 25, 2016

It is hard enough to make it in the world if you have the average set of resources as a child, but if you are unfortunate enough to live in poor and/or rough neighborhoods, your odds of reaching the economic middle class are slim.

Multiple studies over the years have shown that the area where you grow up affects your chances of success later in life. Is this because of some natural economic segregation where like attracts like, or do the neighborhoods actually influence the chances of success? In other words, are bad neighborhoods a symptom of stagnant economic mobility or are they a cause? Research from Harvard economist Raj Chetty suggests the latter — that neighborhoods have an influence on kids' ability to reach the middle class or above.

Factors affecting Economic Mobility

One set of Chetty's research looked at income mobility, strictly defined as "the ability to rise from the lowest 20th percentile of income distribution to the top 80th percentile in one generation." Based on information from tax records in hundreds of geographic areas, the national average for income mobility is 7.5%. Direct comparison of geographic areas shows areas that represent opportunities for improvement. For example, average personal incomes in Atlanta and Salt Lake City are similar, yet poorer children in Atlanta are half as likely to reach the 80th income percentile as compared to poor children in Salt Lake City.

Chetty attributes this effect to several factors in higher-mobility areas including greater racial and economic integration, more two-parent homes, and better schools. According to Chetty, "The strongest predictors of upward mobility are measures of family structure." He has proposed solutions that appeal to both sides of the political spectrum. The emphasis on two-parent families and traditional support structures appeal to conservatives while proposals for government programs to encourage blending of neighborhoods appeals to liberals.

One of Chetty's major points is that there is really not one cure-all solution that works on a national level. The battle for economic mobility is different in different areas across the nation because the root causes are not always the same. Each area has its own ratio of the contributing factors, and each one requires some differences in approach. Churches, community organizations, and civic leaders must identify their specific mix of issues and work in unison with available government and private resources to rectify them.

Moving to Opportunity

Other research of Chetty's found that relocation in the formative years is important. The Moving to Opportunity program in the 1990s served as a perfect controlled test, with 4,600 families entering a lottery to be able to move to a better neighborhood through the use of vouchers. That approach provided a nicely random population for testing. The original data was disappointing, showing limited evidence of benefits.

Chetty reviewed this information given a longer timeframe to measure success, and found a clear distinction corresponding to ages during the move. Children who were young during the relocation found considerably greater economic success than their peers who did not win the moving lottery. However, those who were older experienced either no gains or even negative effects. This makes sense, as moving in adolescence is generally more disruptive and the kids have less time to reap the benefits of the better surroundings.

Chetty's research has performed a great service in outlining areas of opportunity and improvement. Now comes the difficult part, as politicians must agree on the best way to address the problems of bad neighborhoods and execute on their strategy.

Photo ©iStock.com/bodnarchuk

  Conversation   |   12 Comments

Add a Comment

By submitting you agree to our Terms of Service
Brittany | 01.25.16 @ 16:02
I grew up in a poor neighborhood, with family who struggled to make ends meet, so this article hits home. I know how much or a struggle it is to get somewhere when it comes to financial status
Carla | 01.25.16 @ 16:02
I think everyone should have an equal opportunity to better themselves. It has to start with education and guidance councilling
Erin | 01.25.16 @ 16:02
That is an interesting study. Getting politicians to agree on anything though is not going to happen, so the rest of us get to suffer.
Nancy | 01.25.16 @ 16:02
I don't find this surprising. There are exceptions, but you have to have a lot of drive or a lot of luck to break out of where you came from.
Steffanie | 01.25.16 @ 16:03
This is a really interesting article. We grew up in a rural area so I never thought of the impact of poorer areas.
trish | 01.25.16 @ 16:03
This article breaks my heart. I see it in the school I volunteer for. But I also see so many positive influences from outside of the location of their home that have huge effects on them.
Kailie | 01.25.16 @ 16:04
I strongly believe that everyone should have equal opportunities and a fighting chance of being able to be successful if they put in the work to get here, regardless of where they come from in life. The fact that this isn't the case, is very sad.
Kyle | 01.25.16 @ 16:06
This really doesn't surprise me at all, and it's a really sad reality for many people who are trying to make it out of the poverty levels.
irene | 01.25.16 @ 16:08
That's a shame that coming from a worse off neighborhood could effect your future so much
Sara | 01.25.16 @ 16:09
I grew up poor and am trying to do better for my child. So this article hits hard because I know. Sadly do not see any sort of agreement any time soon.
Elaine | 01.25.16 @ 16:09
Hubs teaches at a school that would fall into this category, however, I don't see them as being real "poor" bc they always have the last eat amd greatest techn and clothing. Here are a few that would fall into the category and they deserve better.
Alec | 01.25.16 @ 16:09
This makes perfect sense. If you have a better living situation all around, it makes for a happier person. Happier people are more likely to do better and be better. There are exceptions though, as is always the case.
$commenter.renderDisplayableName() | 10.20.20 @ 17:05