1. Residential Mobility, Heterogeneous Neighborhood effects and Educational Attainment of Blacks and Whites Li Gan Texas A&M University and NBER Yingning Wang Texas A&M University June 21, 2008

2. Introduction Wage difference (blacks & whites) Education difference
Different returns to education
Different neighborhoods
But, returns to education converges
over last twenty years
So, it is our objectives

3. Evidence Social experiments Gautreaux Program
Suburb mover youth do better on several educational measures. (Rosenbaum,J.1992,1995)
Placement assignment were not entirely random (Kling and Votruba 2001 )
Moving to Opportunity (MTO)
Difference in welfare participation, employment and child test score between control group and treatment group is less (Ladd 1997; Hanratty 1998; Katz 2001; Ludwig 2001)

4. Contribution
Identified heterogeneous neighborhood effects on educational attainment
Significant neighborhood effects for people whose location choice is endogenous to education
Crime rate has negative effects on educational attainment
Neighborhood educational level has positive effects on individuals’ educational attainment
Moving will attenuate the original location’s neighborhood effects
Insignificant neighborhood effects for people whose location choice is exogenous to education

5. Outlines Literature Review Data Empirical Strategies Simulation
Conclusion

6. Literature Review Neighborhood effects and educational attainment
Crane (1991), Datcher (1982) Lillard (1993) Duncan (1994, 1997), Ginther, Haveman, Wolfe (2000)
Subject to selection bias
Neighborhood effects identification
Ioannides and Zabel (Journal of Urban Economics,2007 )
Neighborhood effects on housing demand
Housing demand and location choice as joint decision

7. This paper
Assumes moving and educational attainment as joint a decision
Assumes heterogeneity in endogeneity of moving:
Endogenous moving: moving for education
Exogenous moving: moving for reasons unrelated with education.

8. Data Educational attainment data:
the extra schooling years after compulsory education
Individual level data
County level data
The proportion of population with high school degree only
Mortality data (by county and race and gender)
Crime rate
Other county level data
Residential mobility data
Move dummy(1, if moved in 1979 and 1982,otherwise 0)

9. Empirical Strategy Schooling year choice Exogenous effects
Endogenous effects
correlated effects

10. Empirical Strategy
Residential mobility choice ( Ioannides and Zanella 2007 )
IV: the means of adjacent counties which do not include the county where households reside.

11. Empirical Strategy Joint decisions Schooling choice Moving choice
Correlation

12. Identification Problem caused by: Problem solved by:
Unobservable characteristics correlated with endogenous and exogenous neighborhood effects:
Problem solved by:
IV(1): the county mean of selection correction terms
Selection introduced by:
uncorrelated with
Selection terms uncorrelated with
IV(2): residential segregation indexes

13. Heterogeneity Education functions for two types:
Type is determined by:
“Type” is not observable, so:

14. Empirical Strategy Compared with Heckman model Heckman equation
(without type)
Extra terms

15. Table 1: Rivers and Vuong procedures: the second stage results for moving equation 
coefficient
standard error
residual family below poverty at origin
0.004**
0.00
residual family below poverty at destination
-0.001
residual unemployment at origin
0.007*
residual unemployment at destination
0.003
(0.01)
residual high school percent at origin
0.004***
residual high school percent at destination
-0.002
residual crime at origin
0.000
residual crime at destination
-0.000**
residual dissimilarity at origin
-6.107
(4.36)
residual dissimilarity at destination
14.392**
(5.67)
residual black percent at origin
-0.003***
residual black percent at destination
0.001
residual mortality rate at origin
0.010*
residual mortality rate at destination
-0.005

16. external mortality rate for the young at origin 0.0211 0.0266
Variables
Coef.
Std. Err.
external mortality rate for the young at origin
0.0211
0.0266
the number of families below poverty at origin
0.0025
0.0099
unemployment rate at origin
0.0174 **
0.0079
the percent population who finish high school at origin
0.0331
black percent at origin
0.0239
crime rate at the destination
0.0004
0.0009
Dissimilarity index at destination
mum's education
0.0683
dad's education
0.0417
0.0299
family size
0.0326
age
0.1188
0.4788
age squared
0.0001
0.0143
black
2.9120
8.1445
male
1.2854
living in urban or not
0.1197
0.5287
per cap income at origin
0.0021
0.0015
crime rate at the origin
0.0007
Dissimilarity index at origin
1.0133
the percent population who finish high school at destination
0.0167
0.0245
per cap income at destination
0.0014
unemployment rate at destination
0.0284
the number of families below poverty at destination
0.0003
0.0096
external mortality rate for the young at destination
0.0040
black percent at destination
0.0209

17. Table 3: Heckman regression for movers and non-movers
coefficient SE
crime rate **
0.00
0.000
high school Percent
0.026
(0.05)
-0.056
(0.10)
mortality rate
0.001
-0.001
AFQT
0.044***
0.050***
(0.01)
religion frequency
0.118***
(0.03)
0.054
(0.09)
mother went to college or not
0.612***
(0.12)
1.330***
(0.47)
family size
-0.025
-0.072
rank among siblings
-0.071
(0.08)
0.225
(0.18)
poverty status
-0.160
(0.14)
0.616*
(0.37)
times of light illegal
-0.023***
-0.026*
times of heavy illegal
-0.079***
-0.009
(0.06)
safe feeling about school
0.088
0.355*
lived with parent until 18
0.170
0.264
(0.36)
employment in education institution
0.012**
0.005
per cap income
0.000*
-0.000
black percent
0.005***
unemployment
0.020**
-0.012
(0.02)
inverse mills ratio
0.139*
(0.07)
0.096
(0.15)
constant
-2.079
(2.64)
2.252
(5.19)

18. Table 4: Estimation results with heterogeneity of
Endogenous type
Exogenous type
endogeneity of moving 
coefficient. SE
constant
***
(15.14)
2.060
(3.82)
mortality rate
0.003
(0.01)
-0.001
0.00
interaction mortality rate & move
0.015
0.002
high school percent
0.949***
(0.27)
-0.036
(0.07)
interaction high school percent & move
-0.255***
(0.10)
0.005
(0.02)
crime rate
-0.001**
-0.000
interaction crime rate & move
0.001*
poverty status
-1.081*
(0.61)
-0.038
(0.16)
family size
0.042
(0.24)
-0.003
(0.04)
rank among siblings
-1.353**
(0.60)
-0.069
(0.14)
religion frequency
0.412
(0.25)
0.081
(0.05)
times of light illegal behaviors
-0.066***
-0.029***
times of heavy illegal behaviors
-0.129*
mother went to college or not
-2.012**
(0.83)
0.791***
employment in educational institution
0.118***
lived with parents until age 18 or not
4.163***
(1.29)
0.217
(0.17)
safe feeling about school
0.707**
(0.28)
0.094
(0.06)
per capital income
0.003***
0.000
black percent
0.035***
unemployment
0.085**
0.013
AFQT
0.042*** ζ
0.978*
(0.53)
0.014
(0.08)

19. Table 5: Type determination estimation
Coefficient SE
constant **
(17.42)
rank among siblings
-1.084**
(0.48)
religion frequency
0.247**
(0.12)
times of light illegal
-0.080***
(0.02)
lived with parents until age 18 or not
3.005***
(0.73)
black
-1.563**
(0.67)
mother went to college or not
-1.082***
(0.40)
male
-0.661*
(0.35)
oldest sibling's highest grade
-0.255***
(0.09)
age
5.976**
(2.38)
AFQT
-0.061***
age squared
-0.181**
(0.07)

20. Empirical results schooling years Type Mean Std. Dev. Exogenous type
schooling years
Type
Mean
Std. Dev.
Exogenous type
Endogenous type
Total

21. Simulation

22. Repetition
Variable
True value
Type(1)
Heckman-Mover(2)
Heckman-Non_mover(3)
(2)/(1)
(3)/(1)
Bias%
300
gamma1_nonmover
Type 1
0.60
6.0364
gamma1_mover
0.36
0.0724
0.4325
5.9706
beta11
-0.12
0.3479
2.0468
2.0475
5.8825
5.8844 b0
0.50
0.1350
gamma2_nonmover
Type 2
0.26
0.2603
0.4614
0.0000
1.7729
gamma2_mover
1.7386
beta21
-0.50
1.7607
1.7596 b1
0.30
0.2105
0.2318
theta
0.8307
2.1682
500
7.3208
0.0584
0.4326
7.4073
0.3126
2.0472
2.0479
6.5495
6.5516
0.1266
0.2534
0.4589
1.8109
1.8092
1.8136
1.8125
0.2136
0.2130
0.8440
2.2102

23. Repetition
Variable
True value
Type(1)
Heckman-Mover(2)
Heckman-Non_mover(3)
(2)/(1)
(3)/(1)
Bias%
800
gamma1_nonmover
Type 1
0.60
0.0000
6.5782
gamma11_mover
0.36
0.0628
0.4321
6.8863
beta11
-0.12
0.3214
2.0473
2.0476
6.3694
6.3704 b0
0.50
0.1249
gamma2_nonmover
Type 2
0.26
0.2555
0.4620
1.8084
gamma21_mover
1.8050
beta21
-0.50
1.8048
1.8042 b1
0.30
0.2201
0.2353
theta
0.8488
2.2105
1000
6.4524
0.0642
0.4305
6.7092
0.3300
2.0482
2.0477
6.2061
6.2045
0.1304
0.2588
0.4615
1.7834
1.8020
1.7820
1.7828
0.2454
0.2350
0.8454
2.1873

24. size
Variable
True Value
Type Bias (1)
Movers Bias (2)
Non-movers Bias (3)
(2)/(1)
(3)/(1)
10000
gamma1_nonmovers
0.6
Type 1
-0.84
-0.37
0.44
gamma1_mover
0.36
0.29
0.43
1.50
beta11
-0.12
-1.88
2.05
2.06
-1.09
-1.10
constant
0.5
-0.15
-0.24
-0.33
1.54
2.14
gamma2_nonmovers
0.26
Type 2
-0.03
-17.12
gamma2_mover
0.05
-0.14
-3.04
beta21
-0.5
0.02
-0.27
-11.96
-11.87
0.3
-4.05
0.27
0.12
-0.07
theta
-0.06
2.39
6.34
50000
-0.02
-0.36
24.00
0.01
73.25
-63.95
-63.81
-0.22
-4.90
-4.01
0.13
0.47
3.67
4.14
-0.94
0.22
0.30
10.66
14.67
-0.09
1.51
3.91
100000
5.45
9.36
0.38
5.33
5.32
0.15
-0.26
-0.25
-1.75
-1.72
0.46
1.79
-0.08
1.80
1.77
-0.04
0.24
0.25
-5.67
-5.87
-0.17
0.85
2.20

25. Conclusion
Heterogeneity of endogeneity leads to heterogeneous neighborhood effects
Moving will attenuate neighborhood effects.

26. Data description---County level variables
Mean
Std. Dev.
external mortality rate for the young
arrest rate
0.1020
0.2638
crime rate
Dissimilarity index
0.2175
0.3355
employment rate in educational institution
per capital income
percentage of blacks
unemployment rate
the share of adults with high school only
5.3270
the share of adults with less than college
3.6802
the share of adults with less than high school
7.5176
the share of adults who are college graduates
5.1492
mortality rate for age above 55
mortality rate of 2003
the number of physician per 100,000
the number of hospital beds per 100,000

27. Data description--Individual and family level variables
Mean
Std. Dev.
mother goes to college or not
0.6326
0.4823
poverty status
0.2239
0.4170
family size
5.1409
1.8516
mother's highest grades
3.0103
dad's highest grades
3.7313
rank among siblings
1.9116
0.7936
times of light illegal behaviors
0.3581
2.3737
times of heavy illegal behaviors
safe feeling about school
3.4153
0.8511
lived with parents until age 18 or not
0.6532
0.4761
schooling years
4.3601
2.4278
the oldest sibling's highest grade
2.1376
religion frequency
3.4947
1.7024

28. Data description whites blacks others movers non-movers total
whites
blacks
others
movers
non-movers
total
age 14-18
1110
3760
355
1341 97
240
6903
age 18-22
1022
2551
389
891
163
184
5200
Total
2132
6311
744
2232
260
424
12103
Note: movers and non-movers do not have any missing values in the original county or destination.

29. County Characteristics
Residential mobility
White movers
County Characteristics
1979
(before moving)
1982
(after moving)
Implication
% difference
Percentage of urban
more urban
Percentage of blacks
more blacks
unemployment
less unemployment
Per capital income
higher income
The number of families below the poverty level
less poverty
The number of persons below the poverty level
Percentage of population who are high school graduates
more high school graduates
Percentage of population who goes to college
more college graduates
The percentage of physician per 100,000
more physician
The number of hospital beds per 100,000
less hospital beds
Crime known to the police
more crime known to
the police
Arrest rate
higher arrest rate
External mortality rate for the young age 15-34)
less mortality for
the young

30. County Characteristics
Residential mobility
Black movers
County Characteristics
1979
(before moving)
1982
(after moving)
Implication
% difference
Percentage of urban
more urban
Percentage of blacks
less blacks
unemployment
less unemployment
Per capital income
higher income
The number of families below the poverty level
less poverty
The number of persons below the poverty level
Percentage of population who are high school graduates
more high school graduates
Percentage of population who goes to college
more college graduates
The percentage of physician per 100,000
more physician
The number of hospital beds per 100,000
more hospital beds
Crime known to the police
more crime known to
the police
Arrest rate
more arrest rate
External mortality rate for the young(age 15-34)
less mortality for
the young

31. Age distribution Cumulative AGE_79 Frequency Percent 14 313 16.57 15
Cumulative
AGE_79
Frequency
Percent 14
313
16.57 15
489
25.89
802
42.46 16
467
24.72
1269
67.18 17
400
21.18
1669
88.35 18
183
9.69
1852
98.04 19 29
1.54
1881
99.58 20 7
0.37
1888
99.95 21 1
0.05
1889
100

32. Moving across county statistics

33. Simulation
Heckman
Extra terms
Case 1
Case 2

34. Simulation
Case 1: homogeneous type
same as Heckman model

35. Simulation
Case 2: individual has the same behavior responds regardless of the type