What mix matters? Exploring the relationships between individuals' incomes and different measures of their neighbourhood context

There is substantial interest among policy makers in both Western Europe and North America in reducing concentrations of disadvantaged households through initiatives to enhance the `social mix' of neighbourhoods. However, there is little consideration or understanding with regard to which mix of household characteristics matters most in influencing the socio-economic outcomes for individual residents. This paper explores the degree to which a wide variety of 1995 neighbourhood conditions in Sweden are statistically related to earnings for all adult metropolitan and non-metropolitan men and women during the 1996-99 period, controlling for a wide variety of personal characteristics. The paper finds that the extremes of the neighbourhood income distribution, operationalized by the percentages of adult males with earnings in the lowest 30th and the highest 30th percentiles, hold greater explanatory power than domains of household mix related to education, ethnicity or housing tenure. Separating the effects of having substantial shares of low and high income neighbours, it is found that it is the presence of the former that means most for the incomes of metropolitan and non-metropolitan men and women, with the largest effects for metropolitan men.