Working Paper 2021-586
Intergenerational mobility has been linked to both the quality of neighborhoods and the quality of schools and schooling. Understanding the incremental value of investments in either domain is difficult because in many settings, including the U.S., school choices are coupled with neighborhood geography. I take advantage of student access to new subway lines built in Santiago, Chile, to measure the impact of education independent from neighborhood quality using a quasi-experimental design. In Santiago with an established open enrolments school system, the new subway lines substantially reduced transportation costs and increased access to educational opportunities among lower income students. With student level test score data linked with data on parent’s education and demographics, I use a Difference-In-Difference (DID) approach to shows that treated students increased their intergenerational income mobility, with students’ future income ranking increasing on average by 2 percental points above that of their parents, or a 5% of wage increase. Moreover, the paper finds that this is driven by changes in the field of higher education study, not improved test scores or graduation from higher education.
Authors: Francisco Meneses.