Neighbourhood and Family Effects in Educational Progress

Ben Jensen and Andrew Seltzer

Australian Economic Review, 2000, vol. 33, issue 1, 17-31

Abstract: Increasing inequality in Australian cities has created the need for a deeper understanding of the interaction between spatial segmentation and economic outcomes. This paper offers a preliminary economic analysis of Australian neighbourhood externalities in the context of increasing segmentation. Theoretically, neighbourhoods can affect youths' economic out‐comes through their effects on school quality, information flows, job networks, and demonstration effects. We utilise a new survey of 171 year 12 students in ten Melbourne high schools to examine the impact of individual, family, and neighbourhood characteristics on the decision to attend post‐secondary education. It is shown that there exist neighbourhood externalities that affect human capital investment decisions. Finally, we offer some tentative implications for public policy.

Date: 2000
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