This study proposes using correlations between neighboring children in their later socioeconomic status to bound the proportion of inequality in socioeconomic outcomes that can be attributed to disparities in neighborhood background. We apply this approach to educational attainment data from the Panel Study of Income Dynamics, which has sampled neighboring children and followed them into adulthood. We find that, once the effects of a few readily observed family background characteristics are accounted for, the correlation between neighboring children in their eventual educational attainment is only about 0.1. Given that even this figure is inflated by neighbors' similarity in unmeasured aspects of family background, the results suggest a limited role for neighborhood factors in accounting for inequality in educational attainment.

Using 1979–2012 CPS data for the United States and 1975–2012 NES data for Great Britain, we study wage behavior in both countries, with particular attention to the Great Recession. Real wages are procyclical in both countries, but the procyclicality of real wages varies across recessions, and does so differently between the two countries, in ways that defy simple explanations. We devote particular attention to the hypothesis that downward nominal wage rigidity plays an important role in cyclical employment and unemployment fluctuations. We conclude that downward wage rigidity may be less binding and have lesser allocative consequences than is often supposed.