Keeping Down with the Jonses: Neighbors, Networks, and Wages

Abstract

This paper looks at the effects of neighborhood location on wages for a sample of male workers in Los Angeles County. Controlling for the usual human capital and social variables, the poverty of one’s neighborhood has a dampening effect on earnings, presumably because of the “lower quality” of job networks available in poor areas. This “concentrated poverty” or “network” effect seems to be more important in this sample than “spatial mismatch” or distance from employment; nonetheless, commuting (as well as moving) out of a poor neighborhood tends to raise wages, giving some support for recent policy attempts to increase the residential and employment mobility of inner-city residents.