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– By studying families who move, we identify causal effect
of every county in the U.S. on a given child’s earnings
– Predict how much a child would earn on average if he/she had
grown up in a different county

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~Areas with larger African-American populations have significantly lower levels of upward mobility.
~Movers evidence shows that this is not only because of differences in mobility across racial groups
~When a given family moves to a county with a larger African-American population, children’s outcomes fall
~Areas with larger African-American populations tend to have less investment in public goods, schools, etc.
~Key implication: place effects amplify racial inequality
~We estimate that 20% of black-white earnings gap can be attributed to county in which blacks vs. whites grow up

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~Limits to scalability of policies that move people
~ Also need policies that improve existing neighborhoods
~ Challenging to identify causal effects of local policies
~ But we can characterize the features of areas that generate good outcomes

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Give low income families vouchers to move to a better place that would allow better economic mobility.

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Two Policy Approaches to Improving Upward Mobility

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Two Policy Approaches to Improving Upward Mobility

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Importance of place for mobility motivates two types of policies:
1. Help people move to better areas
2. Invest in places with low levels of opportunity toreplicate successes of areas with high upward mobility

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The Reason Why Upward Mobility Varies by Place...

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The Reason Why Upward Mobility Varies by Place...

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Two very different explanations for variation in children’s outcomes across areas:
1. Heterogeneity: different people live in different places
2. Neighborhood effects: places have a causal effect on upward mobility for a given person

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Chetty's Definition of the American Dream

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Chetty's Definition of the American Dream

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Probability that a child born to parents in the bottom fifth of the income distribution reaches the top fifth.