Childhood and Adolescent Neighborhood Effects on Adult Income: Using Siblings to Examine Differences in Ordinary Least Squares and Fixed‐Effect Models

Using sibling data from the Panel Study of Income Dynamics, this article examines the effects of child and adolescent neighborhood conditions on adult income. Estimates from fixed‐effect models and ordinary least squares regression (OLS) models are compared at four stages of childhood development, with three important findings. First, OLS models that include extensive control variables do not necessarily overstate the effects of neighborhoods. Second, neighborhoods have both linear and nonlinear relationships with adult economic well‐being. Third, neighborhoods exert effects on even the youngest children.