Adolescent Neighborhood Effects on Labor Market and Economic Outcomes

Using linked data from the U.S. Census and the Panel Study of Income Dynamics (PSID), I examine how adolescent conditions affect young adult labor market and economic outcomes. A number of theories are examined, including the welfare theory; several neighborhood theories, including the social isolation and epidemic theories; and an economic theory. The results indicate that adolescent neighborhood conditions have strong effects. The results support the social isolation hypothesis and the epidemic theory of neighborhoods. Findings for adult labor income, wages, and income‐to‐needs indicate that adolescents living in the most economically disadvantaged neighborhoods had far lower levels of these outcome variables than adolescents living in only slightly more advantaged neighborhoods. The results for adolescent neighborhood conditions supported the social isolation hypothesis for time spent living below the poverty line for adults. The results also give support to both the welfare and economic models. Adolescents growing up in families that receive welfare income worked fewer hours and had less labor income as adults than did those adolescents who did not receive welfare income. Adolescent poverty and overall levels of income also strongly affect adult labor market outcomes.