Neighbourhood composition and economic prospects: a longitudinal study in the Netherlands

‘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.