To what extent are children’s opportunities for upward economic mobility shaped by the neighborhoods in which they grow up? We study this question using data from de-identified tax records on more than five million children whose families moved across counties between 1996 and 2012.

The study consists of two parts. In part one, we show that the area in which a child grows up has significant causal effects on her prospects for upward mobility. In part two, we present estimates of the causal effect of each county in the United States on a child’s chances of success. Using these results, we identify the properties of high- vs. low-opportunity areas to obtain insights into policies that can increase economic opportunity.

The opinions expressed in this paper are those of the authors alone and do not necessarily reflect the views of the Internal Revenue Service or the U.S. Treasury Department.  This work is a component of a larger project examining the effects of  tax expenditures on  the  budget  deficit  and  economic  activity.   All  results  based  on  tax  data  in  this  paper  are  constructed  using statistics originally reported in the SOI Working Paper “The Economic Impacts of Tax Expenditures:  Evidence from Spatial Variation across the U.S.,” approved under IRS contract TIRNO-12-P-00374.