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Neighbourhood deprivation, life satisfaction and earnings: Comparative analyses of neighbourhood effects at bespoke scales

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  • Gundi Knies

    (University of Essex, UK)

  • Patricia C Melo

    (University of Lisbon, Portugal)

  • Min Zhang

    (University of Cambridge, UK)

Abstract

Neighbourhood socioeconomic disadvantage has a profound impact on individuals’ earnings and life satisfaction. Since definitions of the neighbourhood and research designs vary greatly across studies, it is difficult to ascertain which neighbourhoods and outcomes matter the most. By conducting parallel analyses of the impact of neighbourhood deprivation on life satisfaction and earnings at multiple scales, we provide a direct empirical test of which scale matters the most and whether the effects vary between outcomes. Our identification strategy combines rich longitudinal information on individual characteristics, family background and initial job conditions for England and Wales with econometric estimators that address residential sorting bias, and we compare results for individuals living in choice-restricted social housing with results for those living in self-selected privately rented housing. We find that the effect of neighbourhood deprivation on life satisfaction and wages is negative for both outcomes and largely explained by strong residential sorting on both individual and neighbourhood characteristics rather than a genuine causal effect. We also find that the results overall do not vary by neighbourhood scale.

Suggested Citation

  • Gundi Knies & Patricia C Melo & Min Zhang, 2021. "Neighbourhood deprivation, life satisfaction and earnings: Comparative analyses of neighbourhood effects at bespoke scales," Urban Studies, Urban Studies Journal Limited, vol. 58(13), pages 2640-2659, October.
    • Handle: RePEc:sae:urbstu:v:58:y:2021:i:13:p:2640-2659
    DOI: 10.1177/0042098020956930
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    2. Overman, Henry G. & Xu, Xiaowei, 2024. "Spatial disparities across labour markets," LSE Research Online Documents on Economics 121453, London School of Economics and Political Science, LSE Library.
    3. Eva Andersson & Heleen Janssen & Maarten van Ham & Bo Malmberg, 2023. "Contextual poverty and obtained educational level and income in Sweden and the Netherlands: A multi-scale and longitudinal study," Urban Studies, Urban Studies Journal Limited, vol. 60(5), pages 885-903, April.

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