The Importance of Neighborhood Effects

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The idea that where you grow up, the neighborhood you live in is destiny has been incredibly influential. Chaddie and his co-authors have done two different kinds of studies on this issue. In their work, as I understand it, if you grow up in a poor neighborhood, it's the neighborhood itself somehow that's disadvantaged you. And your claim in the Denmark paper is that those neighborhood effects are merely proxies for family differences that they don't have data on.

Economist and Nobel Laureate James Heckman of the University of Chicago talks about inequality and economic mobility with EconTalk host Russ Roberts. Drawing on research on inequality in Denmark with Rasmus Landerso, Heckman argues that despite the efforts of the Danish welfare state to provide equal access to education, there is little difference in economic mobility between the United States and Denmark. The conversation includes a general discussion of economic mobility in the United States along with a critique of Chetty and others' work on the power of neighborhood to determine one's economic destiny.