A recent series of studies by the Equality of Opportunity Project has documented substantial geographical differences in intergenerational income mobility. These spatial differences are important because they suggest that place matters more than previously thought in determining economic well-being. In this paper, we show that family characteristics vary widely across areas and simulations indicate that differences these family characteristics can explain a substantial share of the variation in intergenerational income mobility across places documented by the Equality of the Opportunity Project. Additionally, we show that the characteristics of families that move differ substantially from families that do not move, which raise doubts about the external validity of causal inferences based on the Equality of Opportunity Project’s analysis of movers.
And from the paper:
…we find that differences in the income of adult children associated with mother’s race, age, education, marital status and nativity explain 80 to 120 percent of the difference in intergenerational income mobility between the lowest and next lowest quintiles of absolute mobility in Chetty et al.’s (2014) place-based distribution of intergenerational income mobility.
I am wondering to what extent this is a criticism of Chetty et.al., or simply a disaggregation. I’m still trying to wrap my mind around what exactly are the differences between place-level characteristics and family- or person-level characteristics. I don’t take Chetty’s original story about places to concern what kind of molecules are in the dirt, or what is the climate, but rather how people in a particular place interact with each other. In that sense the result always was about family- or person-level characteristics. Does the ability of family-level characteristics to pick up these interaction effects mean that place-level effects are not operating?
Anyway, regardless of interpretation this paper does seem to me to make some very real progress toward figuring out what is going on in those mobility studies.