Understanding the Heterogeneity of Intergenerational Mobility across Neighborhoods

Recent research has uncovered large spatial heterogeneity in intergenerational mobility across neighborhoods in countries around the world. Yet there is little consensus on the reasons why mobility is high in some neighborhoods and low in others. This paper analyzes a generalized mobility model that examines the roles that families’ selection into neighborhoods and locational characteristics play in generating this spatial heterogeneity. We use administrative data from Denmark to decompose variation in mobility across nearly 300 larger and 2,000 smaller neighborhoods along these dimensions, accounting for sampling error. Families’ selection into neighborhoods and sampling error explain most observed heterogeneity across neighborhoods. Our generalized model explains most of the differences in mobility between neighborhoods, though a small but persistent difference remains between neighborhoods that our model cannot account for. An analysis of this “irreducible heterogeneity” suggests that neighborhoods exhibit multiple types in terms of their mobility effects.