School Grades and Neighbourhoods – A Natural Experiment

Adolescents with an immigrant background have poorer educational performance than their native counterparts, which may partly be explained by the quality of their neighbourhood area upon immigration to Sweden. An important part of neighbourhood quality is neighbourhood socioeconomic status (NSES). This study examines the impact of initial NSES on subsequent school grades in refugees by using a natural experiment that took place between 1985 and 1994 when refugees were randomly assigned to Swedish neighbourhoods. We applied principal component analysis to assess NSES based on neighbourhood socioeconomic characteristics. We found robust evidence that higher initial NSES was associated with higher school grades in adolescents. In addition, estimated marginal effects showed that low‑performing students’ school grades improved even more when the initial NSES increased. Our results suggest that refugee children benefit academically from initial settlement in less‑deprived neighbourhoods.