Research increasingly shows that opportunities for economic mobility are not equally distributed across different geographical areas; rather, in many countries, opportunities are becoming increasingly concentrated in a small number of regions. And a growing body of evidence is demonstrating the powerful impact that living in disadvantaged neighborhoods can have on one’s long-term, socioeconomic well-being. But to what degree do these “place effects” differ depending on other aspects of one’s upbringing, such as family income, or immigrant status? And how should policymakers consider demographic-specific impacts when designing policies aimed at promoting economic mobility?
Hadar Avivi, a recent PhD graduate of the Berkeley Economics Department, has spent the last few years investigating these granular aspects of place effects on children’s long-run economic outcomes, with support from O-Lab’s Place-Based Policy Initiative. As part of her job market paper, “One Land, Many Promises,” Avivi examines how place has impacted high-income and low-income families differently, and how it has affected immigrant and non-immigrant families differently. Her dataset includes over 1 million Soviet Jews who emigrated to Israel between 1989 and 2000, about 20% of whom were children under the age of 19 when they moved, a sample size large enough to allow Avivi to conduct a robust comparison of how neighborhood effects in childhood differ for different groups of children.
In order to carry out her analysis, Avivi leveraged comprehensive administrative data on the entirety of her sample - children and parents - collected by different Israeli ministries and consisting of tax records, education records, and national census data. Unlike in the United States, where statutes restrict data sharing across government departments, the Israeli Bureau of Statistics serves as a centralized body that is legally allowed to merge data from different ministries, contingent upon approval of a detailed proposal. “Very few countries have the possibility to merge different data sources like education records, tax records,” noted Avivi. This detailed dataset allowed her to incorporate demographic variables, like gender and country of origin, with information about date of immigration, place of residence, educational attainment, and income.
Strikingly, Avivi found substantial variation in the consequences of childhood location of residence across different cities and for different groups - children from high-income and low-income families and children who were born in Israel and those who emigrated during childhood. For high-income families, location effects are strongly and positively correlated: places with higher effects for immigrants are associated with higher effects for Israeli-born children. Among lower-income families, though, there was far more variation in which locations benefited immigrant children (and by how much) and which places benefited Israeli-born children. “The main, surprising finding is that… the correlation between the location effects for low-income immigrants versus Israeli-born children is practically zero,” said Avivi. This suggests that there is no single ladder of location quality, and the benefits from a childhood location of residence vary substantially across families.
For example:
Among immigrant families in the 25th percentile of the income distribution, relocating to the average Israeli city one year earlier increases their children's earnings at age 28 by $90 USD. By comparison, an additional year after relocating to the average Israeli city increases the income rank of children born in Israel by only $77 USD compared to spending one more year in Jerusalem.
Avivi’s paper also finds that location effects are more consequential for immigrant children at the higher end of the income distribution as well; overall, there is less variation in the way location impacts outcomes for Israeli-born children than for immigrant children.
For children from low-income families, moving at birth to a city with one standard deviation higher location effects increases the income of Israeli-born children by $1,370 at age 28, while increasing the income of immigrant children by $1,602 a year.
In order to better understand the disparate effects of location on immigrants and Israeli-born children of low- and high-income backgrounds, Avivi also investigated the relationships between location effects and city-level characteristics. On average, she found that larger cities are associated with more substantive long-run effects on children’s income, especially for immigrant families. And, for immigrant children, cities with very large or very small shares of immigrants were less likely to increase adult incomes. Cities with higher crime rates and welfare expenditures were more likely to be detrimental to children born in Israel, with more muted effects for low-income immigrants.
Finally, Avivi addresses the question of how policymakers could make use of these findings through a theoretical “moving to opportunity” policy, in which the government incentivizes low-income families to move to high-opportunity housing and neighborhoods. “While the first-best policy is personalized,” she says, “ethical and practical considerations [rule out] individually-targeted strategies because policymakers are not allowed to discriminate based on ethnic identity.” However, a “second-best” policy that simply ranks locations based on pooled weighted average estimates of outcomes can lead to worse outcomes for immigrant children (as they are a minority group, and therefore, the weighted average city effect puts, by construction, lower weight on their gains). To minimize the gap between the “first best” and “second best” policies, then, Avivi develops a novel “minimax” model that minimizes the potential harm to any group that might arise due to the inability to provide a targeted policy.
By expanding our understanding of how the long-term effects of location vary across groups, Avivi’s paper contributes to a growing body of evidence on the role of place in determining economic outcomes. The project, which received the 2024 O-Lab and Stone Center Prize for Excellence in Research on Economic Opportunity, also offers new insights into how policymakers can develop sophisticated and equitable policies in settings where the personalized first-best policy is infeasible. In September 2025, Avivi will continue her work as an Assistant Professor in the Department of Economics at University College London, after spending one year as a postdoctoral fellow in the Industrial Relations Section at Princeton University.