The rural advantage: Rural upbringing raises kids’ future earnings, study shows

The rural advantage: Rural upbringing raises kids’ future earnings, study shows

Rural areas are more likely to have a combination of factors that help poor children succeed in the labor market later in life. Raj Chetty’s massive national study turns conventional wisdom on its head about the best places to grow up.

You wouldn’t know it from national news reports that describe decline and dysfunction outside the fast-growing cities, but a major study of Americans’ income finds that children, especially from poor families, benefit from growing up in most rural communities.

Children growing up in poor families in three out of four rural counties have higher incomes than the national average at age 26 simply as a result of spending time in these communities. This increased income is the result of “neighborhood effects” that can either help or hinder children who grow up in every community. According to the findings of a massive national survey of income by Stanford economist Raj Chetty and others, rural places more often have the combination of factors that help poor children succeed in the labor market.

Meanwhile, the centers of the nation’s largest cities — the counties at the heart of the new economy — have “neighborhood effects” that are largely bad for children in poor families. In only 29 percent of these densely populated places do children in poor families grow up to earn more than the national average at age 26.

The study finds a number of factors that benefit children. Communities that are less racially segregated, that don’t have wide disparities in income, that have good schools and have a strong civic life produce grown-ups who earn more than people who grow up in places without those qualities.

Many places in rural America do have weak local economies. Growth is slow or nonexistent. The Wall Street Journal announced this spring that “since the 1990s sparsely populated counties have replaced large cities as America’s most troubled areas by key measures of socioeconomic well-being—a decline that’s accelerating.”

The Chetty study tells a different side of the story. After studying millions of income tax returns over several decades, Chetty finds that the best place for a poor child to live — if the goal is to increase future income — is in those “sparsely populated counties” on the Great Plains.

Most poor children growing up in the vibrant centers of the cities of a million or more people earn less than the national average by the time they reach their mid-20s.

Chetty’s study attempts to isolate and identify the “neighborhood effects” on future income. Yes, income is determined in part by individual characteristics. But what Chetty finds is that places have enduring effects on people. When you hold all other factors constant, Chetty and his legion of co-workers find that some communities help poor children earn more. Others produce a drag on earnings.

Simply put, a child in a poor family growing up in Meeker, Colorado, or Sundance, Wyoming, or Big Lake, Texas, earns much more than the national average at age 26. Those who spent their early years in the city centers of Austin, Texas, Chicago, Illinois, or Charlotte, North Carolina, earn much less. “Rural areas produce better outcomes,” said Nathaniel Hendren, a Harvard University economist and co-author with Chetty in these studies.

The effects aren’t limited to poor kids. Children from rich families also benefit from growing up in these places, although to a lesser degree. The “success of the poor does not have to come at the expense of the rich,” the Stanford economist writes.

Let’s take a specific example: J. D. Vance, author of the best-selling book Hillbilly Elegy. In the book, Vance describes a culture and a community that create “a hub of misery.”

Vance was born and reared in Middletown, Ohio, which is in Champaign County. According to Chetty’s data, which covers the time when Vance was growing up there, Champaign County, Ohio, has a positive impact on children who grow up in poor families.

For every year a poor child spent growing up in Champaign County, he or she increased earnings at age 26 by 0.25 percent over the national average. A child reared in Champaign County for 20 years in a poor family thus earned 5 percent more than the national average — not despite of the community but because of it.

Far from being a detriment, the place where Vance grew up was an advantage, according to Chetty’s data.

Children from many of these counties may not earn their higher salaries at home. Like Vance, most will move off to the big cities. But once there, they will earn more.

In Fayette County, Texas, the rural county where I live, the “neighborhood effect” on poor children is 0.65. For every year spent growing up here, a child in a poor family can be expected to earn 0.65% more than the national average at age 26. Children in poor families who spend their first 20 years Fayette County will on average earn 13 percent more than the national average at age 26.


Just 70 miles to the west of Fayette County is Austin, perennially one of the fastest-growing cities in the country. Travis County, at the center of the sprawling city, is filled with coffee shops, young people, high tech businesses and universities. Its skyline is filled with construction cranes building ever more high-priced condominiums.

Travis County is a millennial paradise and a greenhouse for new businesses. It is also a bad place for poor children. For every year spent growing up in Travis County, a person from a poor family falls 0.46 percent below the national average.

Growing up poor in Travis County on average reduces the income at age 26 of a poor child by 9.2 percent.

The difference in income for a child from a poor family between ultra-urban Travis County and rural Fayette County is more than 20 percent at age 26.

(To read more about this study, go here.  To see the data, go here.)

Chetty, Hendren and the other researchers in this project have attempted to isolate the community factors that affect the income of those who grow up in these places. The connections are hard to make, and the researchers are still teasing out the data.

But they have already identified some factors:

  • Income inequality. Places with a great amount of income inequality have worse outcomes for poor children.
  • Segregated places reduce future incomes for both white and black children in poor families.
  • Places with high “social capital” — low crime rates, lots of religious and civic organization, high levels of trust — are good for poor children.
  • Education matters. The researchers found that places with low test scores and higher dropout rates were worse for poor children. (Children from well-off families seem to do fine regardless of school quality.) Chetty found that measures of education “input” — class size or spending per student — seemed to have less bearing.
  • The impact of all these community effects is greater for boys than for girls.
  • The map shows that areas with a higher percentage of black and Native American residents have less upward mobility. The researchers find that this is a combination of community effects — these places may have more segregation and poorer schools — and discrimination.

“We conclude that one-fifth of the black-white income gap is explained solely by the differences in the counties in which these children grow up,” the researchers write. “That is, if black families were to live in the same counties as white families, the black-white income gap would fall by 20%. Residential segregation by race thus amplifies racial inequality across generations.”

The best places are those where people — rich and poor, black and white — are mixed up. These are places with a strong sense of community, low crime and good schools. Nearly eight out of 10 rural counties have enough of these qualities to help poor children earn higher incomes.

Adam Belz of the Minneapolis Star-Tribune was the first (and really only) reporter to note that rural America had this extraordinary impact on poor children. In his story, Belz explains: “Compared with cities and suburbs, it is much easier to move up into the middle class from rural Minnesota, North Dakota, South Dakota, Iowa and Nebraska. Well-off and hard-up kids go to school together in small towns. They come of age in tight social networks that run through extended family, neighbors, church, school and fields. They feel pressure to work hard and succeed.”

Of the 100 best places for poor children, Belz notes, 77 are in mostly farm counties of the upper Great Plains.

Bill Bishop is a co-founder of the Daily Yonder. Data visualizations by Dave Mistich.

This story was co-published by The Daily Yonder.

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