Where you grow up impacts future earnings potential, study suggests

Where you grow up impacts future earnings potential, study suggests


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NEW YORK — Where you spend your childhood matters, especially when it comes to your future financial success.

That’s the conclusion of a new study by a pair of Harvard economists known for their work on income mobility. Not all neighborhoods are created equal, especially when it comes to the ease at which children can rise from poverty in adulthood, the study found.

Raj Chetty and Nathaniel Hendren of The Equality of Opportunity Project examined the tax records of 5 million American families who moved from one county to another at some point between 1996 and 2012. Using the data for each area, Chetty and Hendren identified several factors that appear to directly impact a child’s future financial success: the prevalence of two-parent households, quality of schools, segregation of income and race, income inequality and crime rates.

“There is tremendous variation across the U.S. in the extent to which kids can rise out of poverty,” Hendren told the New York Times.

Hendren and Chetty used the data to rank the largest 100 counties in the U.S. for children growing up at the 25th percentile of the national income distribution. The best counties included DuPage, Illinois; Snohomish, Washington; Bergen, New Jersey; Bucks, Pennsylvania; and Contra Costa, California. The worst: Baltimore City, Maryland; Mecklenburg, North Carolina; Hillsborough and Orange, Florida; and Cook, Illinois.

Researchers also found that every year a child spends in a better area improves their chances at becoming more successful later in life. And hometowns made a much bigger difference in the lives of kids who grew up poor than children who grew up in middle- to high-income families, according to the study.

In fact, one in three children who grow up in affluent families — or the top 1 percent — make at least $100,000 by the time they’re 30, according to the study. That’s compared to the one in 25 children raised in lower income brackets.

There is tremendous variation across the U.S. in the extent to which kids can rise out of poverty.

–Nathaniel Hendren, study co-author

Another interesting finding — neighborhoods seem have a greater impact on boys than girls. Researchers cited Baltimore, where every year spent in the city reduced earnings by 1.39 percent for boys living in poverty. Girls, on the other hand, lost just .27 percent in income.

The researchers called on political and community leaders to focus on improving conditions in their own counties, which could be the best way to help the children who live there have a better shot.

“The broader lesson of our analysis is that social mobility should be tackled at a local level by improving childhood environments,” the researchers wrote. “We hope the county-level data constructed here will ultimately offer new solutions to increase opportunities for disadvantaged youth throughout the United States.”

So where are the best places to call home? The New York Times created this interactive map to show how each county measures up.

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Jessica Ivins


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