Want Your Kids to Grow Up Rich? Move to Bucks

New study shows big differences in future earnings for poor kids, depending on where they grow up.

Place matters. | Shutterstock.com

Place matters. | Shutterstock.com

Predicting someone’s future income is not like scouting baseball talent. Statistics on height, weight, arm strength don’t apply. Household income matters, we know that already. But what about kids who grow up with parents in the same tax bracket? It seems farfetched to project which of them will be better equipped to climb the socio-economic ladder, right?

Maybe not, according to a massive new study out of Harvard that has sociologists buzzing.  The researchers posit that a child’s geographic location is a strong predictor of future financial success. Because the study was focused on low-income families, it suggests that place is correlated with upward mobility. “The data shows we can do something about upward mobility,” one of the authors, Raj Chetty, told the New York Times. “Every extra year of childhood spent in a better neighborhood seems to matter.”

By looking at the income over time of five million families nationwide, the researchers found some provocative data. Boys who moved away from low-income neighborhoods at a young age make 25 percent more as adults than if they stayed in their old neighborhoods. Also, at what age a child moved to a better neighborhood had a direct relationship with how much they reaped the positive effect of living in a better place. Essentially, the older a child was at the time of a move, the less a new place affected them.

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Living in certain urban areas has an especially depressing effect on the socioeconomic outcomes of children (Baltimore, Fresno and the Bronx included), according to the study, just as some suburban counties are especially advantageous (Bergen County, NJ, Fairfax County, VA, Bucks County, PA among them). Using the impressive amount of data from the study, the Times created a fascinating interactive graphic (which we suggest you peruse) to help visualize the disparity between growing up in different locations.

Example: Poor kids raised in Bucks County grow up to earn $4,230 more a year than poor kids who grow up in Philly, and $5,060 more than poor kids raised in Camden County. Indeed, an average low-income kid raised in Bucks will earn 13 percent more by the age of 26 than will the average American to grow up in a low-income household. And if that same child grew up in Philadelphia instead, he would make three percent less than an average American to grow up in a low-income house. In other words, even for children who grow up with parents in the same tax bracket, the simple fact of geography makes an impressive difference in their respective future earning potential.

If you look at the Philly area as a whole, there’s a better chance for moving up in income brackets when you live in a county within Pennsylvania, instead of one in New Jersey. The surrounding counties in PA registered positive impacts on the future incomes of low-income youth: Montgomery County (+8 percent higher than the average American at age 26), Chester County (+9 percent). Berks County (+5 percent) and Delaware County (+2 percent). Most counties in New Jersey registered negative impacts: Camden County (-6 percent), Atlantic County (-17 percent) and Gloucester County (-2 percent).

Why is all of this significant? Well, it suggests that anti-poverty policies focusing on geographic place could be imperative to fixing income inequality. Back in 1992, that’s exactly what the U.S. Department of Housing and Urban Development tried to do with an experimental program called Moving to Opportunity. The program gave 4,600 low-income families (most of them single-mother households) in distressed urban neighborhoods the resources to find firmer ground. They were split into focus groups: one group was given unrestricted rental vouchers; another was given vouchers that were only redeemable in low-poverty neighborhoods, along with counseling; and a control group was provided with no vouchers. Researchers studied the effects on the adults and kids.

Within a decade, the consensus was that Moving to Opportunity was major disappointment. Adults who moved showed better mental health, but registered no improvement in job outcomes. Neither boys nor girls who moved had standardized test scores that were better than those who stayed put. So the underwhelming results led many to label the program a defeat, as it was cast off as another failed anti-poverty idea.

Then, this Harvard study reexamined the early returns of Moving to Opportunity, and expanded the research outward to millions more. This new data doesn’t tell us why place is so important to changing socioeconomic outcomes. But it provides a new locus to target research around anti-poverty measures once again.