NCPA - National Center for Policy Analysis

Exposure to Better Neighborhoods Has Positive Effects on Children

June 17, 2015

The Moving to Opportunity (MTO) experiment of the U.S. Department of Housing and Urban Development offered randomly selected subsets of families living in high-poverty housing projects subsidized housing vouchers (section 8 or MTO experimental vouchers) to move to lower-poverty neighborhoods in the mid-1990s.

The younger MTO children received a much larger dosage of exposure to improved neighborhood environments than the older MTO children did. The treatment-on-treated effects on post-RA neighborhood poverty rates are similar for the younger and older MTO children.

  • The MTO experimental voucher treatment increased substantially the earnings of children who were young (below age 13) at the point of the move, with a "treatment of the treated" impact on individual earnings of approximately 35 percent.
  • The Section 8 voucher also has a large positive effect on college quality for younger children. The estimated effects on college quality for older children are negative and substantial in magnitude.
  • The Section 8 voucher has smaller effects on the father's presence at birth than the experimental voucher. And the older female children in the MTO experimental group are less likely to have a father listed on the birth certificate when they have births relative to the control group. Hence, marriage and fertility behavior exhibit what is now a familiar pattern of effects, with significant increases in marriage rates and reductions in single parenthood for children who moved to lower-poverty neighborhoods when young, but no change or opposite-signed effects for children who made the same moves at an older age.
  • The improvements in neighborhood environments for the younger MTO children lead to better neighborhood and family environments for the next generation, the grandchildren of the original MTO parents.

Offering low-income families housing vouchers and assistance in moving to lower-poverty neighborhoods has substantial benefits for the families themselves and for taxpayers. Efforts to integrate disadvantaged families into mixed-income communities are likely to reduce the persistence of poverty across generations.

Source: Raj Chetty, Nathaniel Hendren, Lawrence F. Katz, "The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment," National Bureau of Economic Research, May 2015.


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