The Long-Run Consequences of Living in a Poor Neighborhood

Abstract

Many social scientists presume that the quality of the neighborhood to which children are exposed affects a variety of long-run social outcomes. I examine the effect on long-run labor market outcomes of adults who were assigned, when young, to substantially different public housing projects in Toronto. Administrative data are matched to public housing addresses to track children from the program to when they are more than 30 years old. The main finding is that, while living conditions and exposure to crime differ substantially across projects, neighborhood quality plays little role in determining a youth's eventual earnings, unemployment likelihood, and welfare participation. Living in contrasting housing projects cannot explain large variances in labor market outcomes but family differences, as measured by sibling outcome correlations, account for up to 30 percent of the total variance in the data.