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Previous studies attempting to estimate the relative importance of family, neighborhood, residential stability, and homeownership status characteristics of childhood environments on young adult outcomes have: (1) treated these variables as though they were independent, and (2) were limited in their ability to control for household selection effects. This study offers advances in both areas. First, it treats the key explanatory variables above as endogenously determined (sometimes simultaneously so). Second, to deal both with this endogeneity and the selection problem, instrumental variable estimates are computed for how childhood average values of neighborhood poverty rate relate to fertility, education and labor market outcomes in later life. The paper analyzes data from the US Panel Study of Income Dynamics (PSID) that are matched with Census tract data, thereby permitting documentation of a wide range of family background and contextual characteristics. For children born between 1968 and 1974, data are analyzed on their first 18 years and various outcomes in 1999 when they are between 25 and 31 years of age. The application of instrumental variables substantially attenuates the apparent neighborhood effects. Nevertheless, support is found for the proposition that cumulative neighborhood poverty effects averaged over childhood have an independent, non-trivial causal effect on high school attainment and earnings. [ABSTRACT FROM AUTHOR]

Whether children benefit from being raised in a home owned by their parents has important policy implications and has been the topic of much scholarly debate. The authors match Panel Study of Income Dynamics data with census tract data to examine the impact of childhood experiences on adult outcomes for children followed over three decades. This allows one to document a wide range of characteristics. For children born between 1968 and 1974, the authors analyze data on their first 18 years and also various outcomes when they are between 25 and 31 in 1999. The authors control for a comprehensive set of observable parental characteristics and develop a method to control for unobservable child characteristics together with an instrumental variable for the remaining selection problems. Parental homeownership status and children’s college education and homeownership status are closely related, although the former is generated partially by the greater residential stability associated with homeownership. [ABSTRACT FROM AUTHOR]