Professor Ross‘s (IDEAS) study “Place of Work/Place of Residence” with Patrick Bayer at Duke and Giorgio Topa and the NY Federal Reserve was published in the Journal of Political Economy in December (UConn working paper version). The Journal of Political Economy is considered to be one of the top three journals in Economics. This paper provides strong evidence that individual’s success in the labor market is influenced by their immediate neighbors, and that this influence is larger when the neighbors share key traits, such as both having children, being similar in age, or having similar levels of education, possibly because they are more likely to share information about jobs with each other. Individuals whose neighbors have such similar traits are more successful in the labor market having higher employment rates and earnings.

A key feature of the study is its design that is intended to approximate what someone might obtain from a randomized experiment. We use the detailed geography available in confidential census data so that we can control for neighborhoods and then examine whether the attributes of someone’s immediate neighbors within the broader neighborhood have a disproportionate impact on their outcomes. We assert and then demonstrate for key attributes that once households have chosen a neighborhood they appear to be almost randomly distributed across blocks within that neighborhood, which is the source of our quasi-experimental variation.