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Brookings-Wharton Papers on Urban Affairs 2006 (2006) 173-184


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Jens Ludwig: There is widespread belief that a person's neighborhood of residence affects labor market outcomes, particularly for low-skilled minority workers living in central cities. This view stems from the results reported in a large body of theoretical and empirical research from across the social sciences. Yet the conclusion that neighborhoods matter for labor market outcomes seems to stand in sharp contrast to research on the Moving to Opportunity (MTO) randomized mobility experiment, which shows little impact on work or earnings measured four to seven years after random assignment.1

I consider ways of reconciling these conflicting strands of research as well as the implications for public policies designed to improve the labor market prospects of disadvantaged workers. I focus on three of the leading explanations that have been offered to explain why findings from MTO conflict with most people's reading of the existing literature on neighborhood effects: 1) the possibility that MTO did not generate large enough differences in neighborhood environments to affect outcomes; 2) whether estimates of neighborhood effects on the MTO population, which consists of the subset of public housing families who volunteered for the demonstration, generalize to other groups; and 3) the possibility that the effects of mobility on labor market outcomes become more pronounced over time.

This paper by Turney and her colleagues provides useful information on these candidate explanations in the form of detailed, qualitative accounts of MTO families' experiences in the Baltimore demonstration site. After discussing previous hypotheses to reconcile MTO with existing research in light of findings from this work and other studies, I consider the evidence on another explanation that seems to have received less discussion—the possibility of bias with the previous nonexperimental research. [End Page 173]

Did MTO Change Neighborhoods Enough?

It is natural to wonder whether MTO actually changed neighborhoods enough to plausibly affect labor market or other outcomes. After all, of those families assigned to the MTO experimental group, only a fraction moved through the MTO program (58 percent in the Baltimore demonstration site). Experimental-group families were only required to live in their new low-poverty neighborhoods for one year, at which point they were free to use their vouchers to relocate to higher-poverty areas, which many chose to do. In addition, some control-group families wound up moving to neighborhoods with lower poverty rates over time on their own or as a result of HUD demolitions of public housing projects.

Nevertheless, there are at least three reasons to believe that MTO generated important changes in the neighborhood environments of program participants, and therefore has something useful to say about the neighborhoods' role on labor market outcomes. First, across all five MTO cities, assignment to the experimental (rather than control) group reduced poverty rates by about 15 percent of the control group average in the tracts in which families were living four to seven years after random assignment (see table 1). In the Baltimore MTO site the experimental-control difference is more like 20 percent of the control mean for tract poverty, almost as large (17 percent) for tract employment rates, and more than twice as large (42 percent) as a share of the control mean for the presence of affluent (college-educated) adults in the neighborhood. These across-group differences pool together the experiences of families in the experimental group who did and did not move through MTO. The impact on those families who actually moved through the experimental MTO treatment in Baltimore will be about 1.7 times as large as the overall across-group differences.2 The one exception to this general pattern of MTO-induced changes in neighborhood attributes is for racial integration, which was more modestly affected by the MTO experimental treatment.

A second reason to believe that MTO generated important changes in neighborhood environments is that MTO participants themselves perceive important differences in their neighborhood environments, as suggested by [End Page 174] the qualitative interviews described by this...

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