Abstract

This study proposes using correlations between neighboring children in their later socioeconomic status to bound the proportion of inequality in socioeconomic outcomes that can be attributed to disparities in neighborhood background. We apply this approach to educational attainment data from the Panel Study of Income Dynamics, which has sampled neighboring children and followed them into adulthood. We find that, once the effects of a few readily observed family background characteristics are accounted for, the correlation between neighboring children in their eventual educational attainment is only about 0.1. Given that even this figure is inflated by neighbors' similarity in unmeasured aspects of family background, the results suggest a limited role for neighborhood factors in accounting for inequality in educational attainment.

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