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Neighborhood dynamics and the distribution of opportunity

2018; Wiley; Volume: 9; Issue: 1 Linguagem: Inglês

10.3982/qe785

1759-7331

Dionissi Aliprantis, Daniel R. Carroll,

Gender, Labor, and Family Dynamics

Quantitative EconomicsVolume 9, Issue 1 p. 247-303 Original ArticlesOpen Access Neighborhood dynamics and the distribution of opportunity Dionissi Aliprantis, Dionissi Aliprantis dionissi.aliprantis@clev.frb.org Federal Reserve Bank of ClevelandSearch for more papers by this authorDaniel R. Carroll, Daniel R. Carroll daniel.carroll@clev.frb.org Federal Reserve Bank of Cleveland We are grateful to Alejandro Badel, Gerhard Glomm, Jim MacGee, Julia Thomas, Aubhik Khan, Daniel Hartley, Kyle Fee, Pedro Silos, Eric Young, Bob Becker, Roberto Pinheiro, Mahmoud Elamin, Stephen Ross, Víctor Ríos-Rull, Randy Walsh, James Heckman, anonymous referees, and many seminar participants for helpful comments. We also thank Nelson Oliver and Mary Zenker for their research assistance. The views stated herein are those of the authors and are not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. Search for more papers by this author Dionissi Aliprantis, Dionissi Aliprantis dionissi.aliprantis@clev.frb.org Federal Reserve Bank of ClevelandSearch for more papers by this authorDaniel R. Carroll, Daniel R. Carroll daniel.carroll@clev.frb.org Federal Reserve Bank of Cleveland We are grateful to Alejandro Badel, Gerhard Glomm, Jim MacGee, Julia Thomas, Aubhik Khan, Daniel Hartley, Kyle Fee, Pedro Silos, Eric Young, Bob Becker, Roberto Pinheiro, Mahmoud Elamin, Stephen Ross, Víctor Ríos-Rull, Randy Walsh, James Heckman, anonymous referees, and many seminar participants for helpful comments. We also thank Nelson Oliver and Mary Zenker for their research assistance. The views stated herein are those of the authors and are not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. Search for more papers by this author First published: 13 April 2018 https://doi.org/10.3982/QE785Citations: 4 AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Abstract This paper studies neighborhood effects using a dynamic general equilibrium model. Households choose where to live and how much to invest in their child's human capital. The return on parents' investment is determined in part by their child's ability and in part by a neighborhood externality. We calibrate the model using data from Chicago in 1960, assuming that in previous decades households were randomly allocated to, and then could not move from, neighborhoods with different total factor productivity (TFP). This restriction on neighborhood choice allows us to overcome the fundamental problem of endogenous neighborhood selection. We use the calibrated model to study Wilson's (1987) hypothesis that racial equality under the law need not ensure equality of opportunity due to neighborhood dynamics. We examine the consequences of allowing for mobility, equalizing TFP, or both. In line with Wilson, 1987, sorting can lead to persistent inequality of opportunity across locations if initial conditions are unequal. Our results highlight the importance of forward-looking agents. References 1 Aaronson, D. and B. Mazumder (2008), "Intergenerational economic mobility in the United States, 1940 to 2000." Journal of Human Resources, 43 (1), 139– 172. 1 Aiyagari, S. R. 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