Monday, May 4, 2015

Where You Grow Up Determines Your Salary

The NYTimes has a synopsis in this and this article discussing the work of economists Raj Chetty and Nathaniel Hendren who stipulate that where you grow up has a substantial impact on your income in your twenties.  This follows on the work of Robert Putnam that I posted about here.

In the this article if you type in your area in the US, you can see how much living there adds to your salary by the age of 26.  So my county of Fairfax, VA adds over $315900 compared to the national average.  Just a few miles from me in Prince Georges County, MD, it only adds $500 and in Baltimore City, the worst in the US, it means you will make 451o less than the national average by the time you are 26 years old,  never mind as you get older.   I would content this numbers are nominal since it is very expensive to live in Fairfax and perhaps a real (as in inflation numbers) would be more helpful.  But, nonetheless, one gets the message loud and clear from this study.

This research is bolstered by others that stipulate that connections help people rise up so living in an area with jobs and connections to ones nearby certainly make a difference.

As my AP kids get ready to finish out micro/macro with their exams next week, I believe we will start our finance unit with this study and then go from there.  

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