Neighborhoods, employment, and welfare use: Assessing the influence of neighborhood socioeconomic composition

We draw upon data from the Fragile Families and Child Well-Being Study to examine the effect of neighborhood socioeconomic composition on two key economic outcomes, and in doing so to test the validity of the index of concentration at the extremes (ICE) as a measure of neighborhood circumstances. Methodologically, we find that the index succinctly captures economic variation within neighborhoods in a way that avoids problems of colinearity that have characterized prior studies. Neighborhoods can be characterized as falling on a continuum ranging from concentrated disadvantage to concentrated advantage; the ICE measure does a good job capturing this variation and differentiating the neighborhood circumstances experienced by different groups. Substantively, we show that neighborhood economic circumstances are related to new mothers’ welfare use and employment, above and beyond their individual socioeconomic characteristics.