Are richer neighborhoods always better for the kids?

Based on Norwegian administrative registers, we provide new empirical evidence on the effects of the childhood neighborhood's socioeconomic status on early educational performance. A neighborhood's status is measured annually by its adult inhabitants' earnings ranks within larger commuting zones, and the childhood neighborhood status is the average status of the neighborhoods inhabited from the year after birth to age 15. Identification of causal effects relies on within-family comparisons only. Our results reveal a distinct hump-shaped relationship between the socioeconomic status of the childhood neighborhood and school results at age 15–16, such that the optimal neighborhood is of medium rank. [ABSTRACT FROM AUTHOR]