Introduction

Place matters. While many like to think of the United States as a country where anyone willing to work hard can succeed, the reality for many is more complicated. The American Dream lies far out of reach for young people across much of the country not due to any individual shortcomings, but due to the unique mix of social, cultural, and economic forces at work in their communities—forces that condition and affect, if not always determine, lifetime outcomes.

Raj Chetty, Nathaniel Hendren, and their colleagues at Harvard University’s Equality of Opportunity Project (EOP) set out to measure these effects of place on children’s earnings as adults (so called neighborhood effects). They controlled for a large number of individual and family characteristics in order to isolate the effect of place alone, which they call the “childhood exposure effect.” It measures the percent increase or decrease in income at age 26 relative to the national mean that a child can expect by spending one additional year in any given county. Some counties have positive exposure effects (boosting incomes), some negative (reducing them).

EIG merged EOP’s data on economic mobility with its own Distressed Communities Index (DCI) data on economic well-being to produce a dynamic analysis of how the economic situation in a place today may impact the economic opportunities of its residents tomorrow. Of course, we cannot see the future, and this piece only extrapolates the childhood exposure effects documented in EOP’s work (based on the incomes at age 26 of children born from 1980 to 1986) by associating them with the prevailing economic conditions in counties from 2010 to 2014. The results are therefore best interpreted as whether, for example, a county that is prospering today has a history (or not) of boosting economic mobility. Whether the county delivers on or defies past performance remains to be seen.