New article on Does neighborhood income mix affect earnings of adults? New evidence from Sweden

A new article by Roger Andersson, Sako Musterd & Timo M. Kauppinen in Journal of Urban Economics.

2008 Does neighborhood income mix affect earnings of adults? New evidence from Sweden, Vol. 63, Issue 3, pp. 858-870.

Abstract
This paper contributes to the literature on obtaining unbiased estimates of neighbourhood effects, explored in the context of a centralized social welfare state. We employ a longitudinal database comprised of all working age adults in metropolitan Sweden 1991-1999 to investigate the degree to which neighbourhood income mix relates to subsequent labor incomes of adults and how this relationship varies by gender and employment status. We control for unobserved, time-invariant individual characteristics by estimating a first-difference equation of changes in average incomes between the 1991-1995 and 1996-1999 periods. We further control for unobserved time varying characteristics through an analysis of non-movers. These methods substantially reduce the magnitude of the apparent effect of neighbourhood shares of low-, middle- and high-income males. Nevertheless, statistically and substantively significant neighbourhood effects persist, though relationships are nonlinear and vary by gender and employment status. Males who are not fully employed appear most sensitive to neighbourhood economic mix in all contexts.