Where Poor Kids Grow Up Makes A Huge Difference

May 4, 2015
Originally published on May 4, 2015 3:28 pm

In two new studies, Harvard economist Raj Chetty and his colleagues found that where poor kids grow up has a huge effect on how much money they earn as adults.

In one study, families living in public housing were randomly selected to be eligible for housing vouchers that required them to move to low poverty neighborhoods. Kids whose families received the vouchers grew up to earn significantly more than those whose families remained in public housing.

In a second study, Chetty and his colleagues looked at data for millions of families who moved from one county to another. Based on this data, they were able to estimate how much where poor kids grow up affects their income as adults.

The table below lists the 50 U.S. counties that have the biggest effects on kids' incomes as adults. The numbers, based on the new research, show how much growing up in a given county affects a child's annual income as an adult.

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DAVID GREENE, HOST:

And let's now turn to poverty in the United States. In the 1990s, the U.S. government carried out an experiment to see if moving families out of public housing projects and into neighborhoods with less poverty made their lives better. The results disappointed many of the study's supporters, but now, more than 20 years later, there's some surprising new evidence. Here's Jacob Goldstein from NPR's Planet Money team.

JACOB GOLDSTEIN, BYLINE: The experiment from the '90s was called the Moving to Opportunity Study. The theory behind it seemed like common sense.

JENS LUDWIG: The idea was that if poor families were able to move into less poor neighborhoods, their kids would start doing better in school and the adults would start doing better in the job market.

GOLDSTEIN: Jens Ludwig is a University of Chicago professor who's been tracking this project since the '90s. Families that volunteered to participate were randomly assigned to different groups. One group stayed in public housing. Another was given special vouchers that could be used to pay the rent, but only in neighborhoods with low poverty rates. Thousands of families participated. Researchers followed them for more than a decade. Here's what they found.

LUDWIG: Income did not increase for adults when they moved to lower poverty areas, which was a big surprise to people.

GOLDSTEIN: The results for children were also discouraging.

LUDWIG: We did not see the big changes in educational outcomes for kids that lots of people had expected to see.

GOLDSTEIN: A final evaluation was published a few years ago, and it seemed like that might be the end of it. But recently, a Harvard economist named Raj Chetty decided to take one more look. Chetty was motivated by a separate study he did where he found that moving during childhood affects kids' incomes when they grow up. And, Chetty says, the younger kids are when they move, the bigger the effect.

RAJ CHETTY: So if you move to a better place at age 9 instead of 10, you have an improvement. If you move at age 12 instead of 13, you have an improvement. Every extra year matters.

GOLDSTEIN: So Chetty and his colleagues went back and looked at families from the Moving to Opportunity Study who had young kids when they moved back in the '90s. They asked, how were those kids doing now, 20 years later? The answer - much, much better than the kids who did not move.

CHETTY: We find that children who moved before they were 13 years old - so at relatively young ages - are earning 30 percent more as adults. They're about 30 percent more likely to go to college. They're less likely to become single parents. They're living in better neighborhoods themselves as adults.

LUDWIG: It is a huge deal.

GOLDSTEIN: Again, Jens Ludwig, the researcher who's been following this project for decades.

LUDWIG: Everything up to this point would have made you predict that there wouldn't be much of a long-term benefit for the little kids in these households when they reach adulthood. And so it has come as a huge shock to see surprisingly large gains in their earnings.

GOLDSTEIN: That finding is not a huge shock for Marcy Lopez. In the early '90s, she was living at a Los Angeles housing project with a son and a daughter in elementary school.

MARCY LOPEZ: It was terrible. We used to come, like, very late and just run from the car to the apartment 'cause there were always shootings.

GOLDSTEIN: One day, when she went to pay the rent, Marcy saw a flier about the Moving to Opportunity Study. She signed up and wound up moving with her kids to an apartment in West LA. She says the neighborhood felt safer. She liked the local schools. Today, her kids are in their late 20s, and Lopez says they're doing great.

LOPEZ: They graduated. They got married. They have decent jobs. I'm very happy.

GOLDSTEIN: How do you think your kids' lives would've been different if you had stayed at your old neighborhood?

LOPEZ: Oh, my God. Don't even say that. Probably drop out from school and no jobs. I don't even want to think about it.

GOLDSTEIN: Until now, it's been hard for many poor families to do what Marcy Lopez did. Millions of families get housing vouchers, but those vouchers don't always cover the rent in wealthier neighborhoods. That may soon change. Under new rules, the vouchers in many cities will cover more of the rent when people move to more expensive neighborhoods. Jacob Goldstein, NPR News.

GREENE: And if you want to dig into this issue more, you should check out npr.org. We have a table there showing how growing up in different counties affects kids' incomes as adults. Transcript provided by NPR, Copyright NPR.