Residential Mobility, Neighborhood Effects, and Educational Attainment of Blacks and Whites

This paper proposes a new model to identify if and how much the educational attainment gap between blacks and whites is due to the difference in their neighborhoods. In this model, individuals belong to two unobserved types: the endogenous type, which may move in response to the neighborhood effect on their education; or the exogenous type, which may move for reasons unrelated to education. The Heckman sample selection model becomes a special case of the current model in which the probability of one type of individuals is zero. Although we cannot find any significant neighborhood effect in the usual Heckman sample selection model, we do find heterogeneous effects in our two-type model. In particular, there is a substantial neighborhood effect for the movers who belong to the endogenous type. No significant effects exist for other groups. We also find that the endogenous type has more education and moves more often than the exogenous type. On average, we find that the neighborhood variable, the percentage of high school graduates in the neighborhood, accounts for about 28.96% of the education gap between blacks and whites.