NEIGHBOURHOOD COMPOSITION AND ECONOMIC PROSPECTS: A LONGITUDINAL STUDY IN THE NETHERLANDS

ABSTRACT ‘How does the “social” and “cultural” neighbourhood composition impact on the economic prospects of its inhabitants?’ We addressed this question, while using a new longitudinal dataset. We analysed the individual income changes between 1999 and 2005 of all Dutch 18–49 year‐olds (subdivided in four strata) who stayed in the same neighbourhood throughout the period while focusing on the role of neighbourhood after controlling for a range of individual variables. The impact of neighbourhood contexts is statistically significant, yet limited compared to the impact of individual characteristics. Social context – neighbourhood median income and income mix – turned out to be most relevant in terms of neighbourhood impact. Higher median incomes and more income mix in the neighbourhood have significant positive effects on individual income development.