Evidence of Neighborhood Effects from MTO: LATEs of Neighborhood Quality

This paper finds evidence of positive neighborhood effects on adult labor market outcomes using the Moving to Opportunity (MTO) housing mobility experiment. Our results stand in such sharp contrast to the current literature because our analysis focuses on outcomes of the subpopulation induced by the program to move to a higher quality neighborhood, while previous analyses have focused on outcomes of either the entire population or the subpopulation induced by the program to move to any neighborhood. We propose and implement a new strategy for identifying heterogeneous transition-specific effects that exploits the identification of the idiosyncratic component of an ordered choice model. We estimate Local Average Treatment Effects (LATEs) of the change in quality most commonly induced by MTO vouchers, between the first and second deciles of the national distribution of neighborhood quality. Although MTO vouchers induced much larger changes in neighborhood quality than standard Section 8 vouchers, these LATEs only pertain to a subpopulation representing under 10 percent of program participants.