Local Average Neighborhood Effects from Moving to Opportunity

Abstract:     
This paper estimates Local Average Treatment Effects (LATEs) of neighborhood quality from the Moving to Opportunity (MTO) housing mobility experiment in a generalized model with multiple treatment levels. We propose a new approach to identifying parameters that exploits the identification of unobservables in the multi-level model. The variation in neighborhood quality induced by MTO only allows us to identify LATEs of moving from the first to the second decile of the national distribution of quality, but in other applications the approach may allow for the estimation of Marginal Treatment Effects. Estimated LATEs on employment, labor force participation rates, earnings, income, welfare receipt, and body mass index are consistent with standard theories of neighborhood externalities.

Number of Pages in PDF File: 41

Keywords: Marginal Treatment Effect, Local Average Treatment Effect, Essential Heterogeneity, Strong Ignorability, Average Causal Response, Moving to Opportunity

JEL Classification: C31, C36, C50, D04, I38, R23

Accepted Paper Series