Neighborhoods, Family and Intergenerational Mobility

To what extent do childhood neighborhoods shape long-run socio-economic outcomes, and through which mechanisms? Using the quasi-random assignment of refugee children across neighborhoods in Denmark, we show that exposure to higher-quality neighborhoods—as measured by average neighborhood income and the wage outcomes of permanent resident children—raises labor force participation and market income in adulthood. Beyond economic integration, better neighborhoods further promote social integration by increasing educational attainment and naturalization. Applying a causal mediation analysis, we reject full mediation via neighborhood and school characteristics but not via parental income, pointing to the family as a fundamental mediator of neighborhood effects.