If you want your kids to grow up to be strong earners, your location matters – much more, in fact, than researchers previously thought. For example, if you’re very low income raising children in the Seattle area, it’s better to live in Snohomish County than in Pierce County or Skagit County. What’s more, the younger a child is when they move to Snohomish, the bigger improvements they will make. Children who move residence and a younger age are less likely to become single parents, more likely to go to college and more likely to earn more later in life.
Every year a poor child lives in Snohomish County adds nearly $200 to his or her annual income when he or she is age 26, compared with a childhood spent in the average U.S. county. Over the span of an entire childhood (up to age 20 in this analysis), the difference amounts to nearly $3,700, or 14% more in median income as a young adult.
These findings, especially those indicating how much each extra year matters, are from a new study by Raj Chetty and Nathaniel Hendren that has huge consequences for our thinking about poverty and mobility in the U.S. This two-person team of Harvard economists is already well-known work on income mobility, but the recent findings go much further. Now, the question is no longer limited to which counties merely correlate well with income mobility; this new data indicates that some places actually cause it.
Consider King County, in WA. It ranks among the top counties in the U.S. in helping poor children move up the income ladder, coming in 2,013th out of 2,478 counties (or better than about 81% of U.S. counties). Interestingly, it also ranks higher for poor children than it does for rich children.
Across the U.S., the Harvard research study found five elements associated with solid upward mobility: low segregation by income and race, lower rates of income inequality, stronger schools, less violent crime, and a greater proportion of two-parent households. Interestingly, the effects of place are more pronounced for boys than for girls, and for lower-income children than for wealthier kids.
“The broader lesson of our analysis,” Mr. Chetty and Mr. Hendren write, “is that social mobility should be tackled at a local level.” Here’s how King County performs in relation to its neighbors.
In some areas, the new estimates of mobility are at odds with earlier studies. For example, previous estimates suggested that New York City was a good place for lower-income children, with children raised in lower-income families having above-average outcomes in adulthood.
Yet one of the reasons New York appeared above average is that is has such a huge number of immigrants, who shows very strong rates of upward mobility regardless of where they live. So there’s nothing about New York in particular helps these children to do better.
To adjust for variations and discrepancies simply caused by different types of people residing in different neighborhoods and areas, Chetty and Hendren based the estimates on the earnings of over 5 million children who moved between areas back in the 1980s and 1990s. Such estimates are causal, indicating that moving a child to a new area will in fact cause her to do better or worse down the road.
In the more recent estimates, Manhattan actually ranks among the worst counties in the U.S. for girls from low-income households.
In this case, better or worse is calculated by the household incomes of children in early adulthood. Of course this causes New York to look worse than it would if simply individual incomes were used, since NYC (along with Northern California), has among the lowest marriage rates in the U.S. As it turns out, Manhattan actually scores better than most of the country at boosting the individual incomes of poor girls. Marriage rates, too, are strongly affected by where children grow up.