Prosperity Watch Issue 49, Number 2: Neighborhoods Matter to the Lifetime Earnings of North Carolina Children

New research from the Equality of Opportunity Project out of Harvard University provides compelling evidence that where children grow up can have long-lasting impacts on their economic prospects.  The research uses big data to investigate not just that variation in economic mobility exists across neighborhoods but that places themselves can determine children’s economic outcomes as adults.  Every year a child spends in a better neighborhood matters for their earnings and the younger a child moves to a better place matters for their college attainment, family stability as well as earnings.

North Carolina has some variation in providing children quality communities that support mobility.  While 80 of the state’s 100 counties deliver an earnings penalty to poor children who grow up there, the degree to which earnings are affected varies considerably. Forsyth and Scotland Counties rank among the lowest in the nation for the lack of pathways that low-income children have to improved economic security as an adult.  In Forsyth County, each year a child lives there reduces their earnings by 1.1% relative to the national average.  This means that a child who spends their childhood from birth to 20 years of age in Forsyth County faces an earnings penalty of 22 percent. Graham County provides the best mobility in North Carolina but still ranks 808th out of 2,886 counties in the country.  A child in Graham County who lives in the bottom 25th percentile of the income distribution would see their earnings raised by .51 percent each year they live in that environment.

Interestingly, counties within the same metropolitan areas can have different effects on children’s prospects of getting ahead.  This appears to be particularly true in the Western and Eastern parts of the state.  For example, in the Hickory metro area, Alexander County has a neutral impact on poor children’s earnings potential as adult while in Burke County there is an annual earnings penalty of .36 percent.

The research finds that the counties that provide better pathways to higher earnings have several characteristics in common.  These places have greater residential integration, lower levels of income inequality, higher civic participation levels and higher performing elementary schools as measured by test scores.  It is also clear that there are differences in how girls and boys as well as different racial and ethnic groups experience mobility with the greatest barriers to mobility existing for African-American boys.

It has long been recognized that place matters for economic outcomes.  This new data demonstrates that a child’s exposure to certain communities can expand or limit their prospects for moving out of poverty.  This has very real policy implications that demonstrate the potential of local policies to impact children’s outcomes and economic stability.  In particular, the research supports the body of evidence that ensuring children’s environments provide pathways to opportunity can support positive long-run economic outcomes.

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