Melbourne Institute of Applied Economic and Social Research - Theses

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    Geographic inequality: neighbourhood externalities and education expectations
    JENSEN, BEN ( 2002)
    This thesis examines the role of neighbourhood in youths' education. Estimates are provided of the statistical significance and the quantitative importance of neighbourhood characteristics in the education expectations of youths in Metropolitan Melbourne, Australia. Extensive analysis of variability of estimates containing distinct neighbourhood measures offers a rationale for inconsistent findings in previous research of the influence of neighbourhoods. Over 1200 secondary school students were surveyed for this analysis. Data was obtained concerning students' education expectations, and their personal and family characteristics such as education and employment histories. This data was combined with Census data identifying various neighbourhood characteristics. Estimations of youths' education expectations yielded a statistically significant and quantitatively important role of neighbourhoods. Various statistical techniques are utilised to quantify the role of neighbourhoods and limit problems of misspecification that have plagued literature analysing the influence of neighbourhoods. Misspecification tests show that neighbourhood characteristics ‘proximate’ to the dependent variable of education expectations provide more consistent estimates of the influence of neighbourhoods. Monte carlo experiments identify the role of omitted variable bias in estimating youths' education expectations. It is asserted that variations in findings across various neighbourhood characteristics may explain some of the variation in previous research of the influence of neighbourhoods. The interactions of school quality and neighbourhood characteristics are also explored. Estimations including distinct measures of a youths' neighbourhood show that estimations including particular neighbourhood characteristics are more susceptible to misspecification, particularly considering variation in school quality. The quantitative importance of various influences of youths' education expectations is discussed. The importance of individual characteristics such as gender, various family characteristics, and the impact of school sector are also analysed. Findings of the importance of neighbourhoods that can promote and retard the educational investments of youths could have severe impact upon inequality in Metropolitan Melbourne.