Experimental Evidence of Neighbourhood Effects on Education: The Case of the 2004 Athens Olympic Village

Abstract:

Several important social science literatures emphasize the role of neighbourhood characteristics on various socioeconomic outcomes, including education. For example, living in a better neighbourhood has the potential to enhance human capital development and reduce child problem behaviours. However, the estimation of the causal effects of neighbourhoods is fraught with difficulties, because individuals tend to sort across neighbourhoods for reasons that are likely to be correlated with the underlying determinants of their outcomes. In this paper we avoid the problem of endogenous selection by using data from the randomized selection of low income families to live in the Olympic Village built for the purposes of the 2004 Athens Olympic Games. We examine the educational outcomes of children between the ages of 12 to 18 of the selected families and compare them with the children of the families that entered the competition but were not selected to move to the Olympic Village.