Is Moving to Opportunity the Only Way? Evidence from the Netherlands

Abstract

Evidence that neighborhoods shape life outcomes relies almost entirely on individuals who move, thus limiting what can be learned from a policy perspective. In this paper, we estimate neighborhood effects without relying on movers, by exploiting a Dutch policy that barred workless individuals with fewer than six years of residency from moving into selected disadvantaged neighborhoods. Using population-wide administrative data, we show that the policy raised employment and reduced welfare receipt and crime among residents of targeted areas. Yet, the labor market outcomes of adults who were living in these neighborhoods do not respond to these improvements, except where the residency rule created direct work incentives. We also find limited evidence of effects on children. Together, these results suggest that improving the socioeconomic composition of distressed neighborhoods does not deliver benefits similar to those of policies that help families move to higher-opportunity areas.