Where a child grows up can make a big difference in his or her income as an adult. Even a few years of exposure to areas with good schools and opportunity can make a big difference.
Some people are born on third base and go through life thinking they hit a triple, the old quote goes. But what about the rest of us? The economic mobility for children based on where they’re born and raised has been an increasing focus of scholars as inequality has widened to Gilded Age proportions.
Place matters, and it varies widely. For example, a 2013 study found that 10.4 percent of children from the Seattle area who grew up in the lowest fifth of income level would reach the highest fifth as adults. By contrast, only 4 percent in Atlanta and 4.3 percent in Charlotte had that ladder up, despite those metros being major corporate centers with great riches.
In December, economists Raj Chetty of Stanford and Nathaniel Hendren of Harvard sought to advance the subject with an even more extensive and rigorous analysis. Their paper looks at every county in the United States to see how growing up there affects a child’s income in adulthood (the results aren’t confined to only the county level).
In addition, it examines what happens when parents move. For example, every year that a child is exposed to a better county raises income in adulthood by 0.5 percent. Segregation matters, especially for boys. And, Chetty and Hendren argue, one-fifth of the black-white earnings gap can be explained by where the children grow up.
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The paper is very wonkish. But once again, Seattle scores well. Seattle came in second for the income opportunity as adults for children of below-median-income families (Salt Lake City was No. 1). The average predicted increase for the Seattle “commuting zone” (roughly including King, Pierce, Snohomish and a few chunks of other counties) was tops in the country. By some other metrics, Seattle was still in the top 10. Among counties, King ranked No. 9 nationally. Even a year’s exposure here increases potential above the national average.
The downside is that many of the best places to raise a child in a poor household are very expensive. The researchers do identify the concept of “opportunity bargains,” less expensive places with better outcomes. This isn’t a WalletHub list, so I can’t tell you the best, cheapest place. Being near a city with a strong economy and in a state with decent schools and social compact no doubt helps.
This isn’t the last word about economic opportunity — social capital is a big deal — but it gets us beyond first base, and confirms that location does matter.
Today’s Econ Haiku:
Get a field-hand job
When the immigrants are gone
See how long you’d last