Group Study: 'Moving to Opportunity' Program in the U.S.

Moving to Opportunity (MTO) experiment and its long-term effects

In the United States, the Moving to Opportunity (MTO) experiment was studied by Chetty and others, who used tax data from the IRS to track the educational attainment, income, and career changes of 7 million American families that relocated to different areas (Chetty & Hendren, 2018; Chetty, Hendren & Katz, 2016).

They found that:

(i) children who moved to better residential environments before the age of 13 had higher college attendance rates and mid-20s incomes about 31% higher than those who didn't move.

(ii) children who moved at age 13 or older did not show significant academic or income benefits and sometimes even had negative outcomes due to the stress and conflict of adapting to a new environment.

Chetty and his team explained that previous researchers didn’t find significant effects in the MTO experiment because they failed to measure the differing impacts based on the age of the children.

They demonstrated that exposing younger children (under 13 years) early to better living environments positively affects their academic achievements and income (childhood exposure effect). Each year a child spends in a better environment from ages 9 to 23 reduces the income gap with native children of the same environment by about 4%. For instance, a child from a low-income family staying in a better area from ages 9 to 18 can reduce the income gap by 40% compared to a native child who has always lived in that area.

Based on these findings, Chetty and colleagues argue that both the living environment and duration of stay are crucial and that improving residential environments can prevent the intergenerational transmission of poverty.

Chyn analyzed the MTO experiment in the Chicago area during the 1990s. The Chicago Housing Authority had to relocate residents due to the deterioration of public housing built in the 1950s and 1960s.

He found that children who moved to better areas:

(i) had an 8% lower high school dropout rate,

(ii) were 14% less likely to be arrested for serious crimes,

(iii) had a 9% higher employment rate, and

(iv) had mid-20s incomes 16% higher than those who stayed in public housing areas (Chyn, 2018).

Chyn argued that subsidizing the cost for low-income children to grow up in better living environments offers greater societal utility compared to the government's expenditure.

References

Chetty, R. and N. Hendren. 2018. The impacts of neighborhoods on intergenerational mobility I: Childhood exposure effects. Quarterly Journal of Economics 133(3):1107-1162.

Chetty, R., N. Hendren, and L. F. Katz. 2016. The effects of exposure to better neighborhoods on children: New evidence from the Moving to Opportunity experiment. American Economic Review 106(4): 855-902.

Chyn, E. 2018. Moved to opportunity: The long-run effects of public housing demolition on children. American Economic Review 108(10):3028-56.