Gary Solon University of Michigan SBR-9630918 Recent discussions of sources of inequality have suggested that individuals' human capital and other socioeconomic outcomes may be strongly influenced by the neighborhoods in which the individuals grew up. Particular concern has focused on the role of "underclass" neighborhoods in perpetuating poverty and welfare dependency. The purpose of this research is to identify an upper bound on the socioeconomic impact of community origins by estimating correlations between neighboring children in their later socioeconomic status as adults. The estimates will be based on data from the Panel Study on Income Dynamics, which has sampled neighboring children and followed them into adulthood. This approach can identify only an upper bound on the influence of neighborhoods because the observed neighbor correlations will reflect the influence of similar family backgrounds as well as the influence of shared community background. Nevertheless, neighbor correlations will provide crucial information on the potential scope of neighborhood effects. Large neighbor correlations would leave open the possibility that neighborhoods are very influential. Small neighborhood correlations would indicate that community origins must play only a minor role.
