Do neighborhood conditions affect high school dropout and college graduation rates?

Abstract

This article estimates the effects of neighborhood conditions on the educational attainment of young people. Using the Panel Study of Income Dynamics to measure the background characteristics of young people and their educational attainment at age 25 and the U.S. Census to describe the characteristics of the neighborhoods in which respondents lived between ages 14 and 18, the paper estimates neighborhood effects separately for blacks and whites and tests for nonlinearities and important interactions in these effects. We find that neighborhood characteristics influence educational attainment among young people, but do so differently for black and white youth. Among black youth, growing up in neighborhoods with wealthier residents, more two parent families, and a greater percentage of workers in professional or managerial occupations leads to a substantial decrease in the high school dropout rate. These neighborhood characteristics do not affect the probability of graduating from college, however. Neighborhood effects among black youth occur primarily among those from disadvantaged backgrounds. Among white youth, neighborhood conditions positively affect the probability of graduating from college but do not significantly affect the high school dropout rate. These effects are concentrated among those from relatively advantaged backgrounds.