We implement a series of tests to assess the validity of this assumption and evaluate the robustness of our quasi-experimental methodology. First, we compare siblings within the same family, and show that the difference in siblings’ outcomes is proportional to the difference in their exposure to better environments. When a family with two children moves from Cincinnati to Pittsburgh, the younger child does better than the older child on average. Second, we show that one obtains similar estimates of exposure effects when analyzing families displaced by events outside their control, such as natural disasters or local plant closures. Finally, we exploit differences in cities’ effects across subgroups to develop sharper tests for exposure effects. For example, some areas – such as those with high crime rates – generate significantly worse outcomes for boys than girls. We find that when a family with a boy and a girl moves to such an area, their son’s outcomes worsen in proportion to the number of years he grows up there, but their daughter’s outcomes change much less. Similarly, some areas are particularly good at producing “superstars” – children who reach the top 10% of the income distribution – even though they don’t produce better outcomes on average. We find that children who move to such areas when young are themselves more likely to become superstars, but do not have higher incomes on average.
The main innovation of the new paper is its focus on children who moved. Doing so allows the economists to ask whether the places themselves actually affect outcomes. The alternative is that, say, Baltimore happens to be home to a large number of children who would struggle no matter where they grew up.
The data suggests otherwise. The easiest way to understand the pattern may be the different effects on siblings, who have so much in common. Younger siblings who moved from a bad area to a better one earned more as adults than their older siblings who were part of the same move. The particular environment of a city really does seem to affect its residents.
Mr. Chetty and Mr. Hendren also subject their analyses to more demanding tests. For instance, rather than making comparisons between families that move at different times, they can also make comparisons within the same family, comparing the results for older and younger siblings after a move. And indeed, when a family moves to a better city, the younger sibling — who will experience more years of exposure to a good neighborhood than an older brother or sister — enjoys better long-run outcomes. Again, the younger sibling enjoys a better future in proportion to the extra years of exposure he or she has.
They also explore what happens in those cities where boys tend to do particularly poorly — typically those with more crime, inequality and segregation. When families with a son and a daughter move to these cities, the son’s outcomes worsen relative to his sister. This gap is larger the longer they both spend in that neighborhood.
