This study uses data on sisters and neighbouring girls in the Panel Study of Income Dynamics to estimate sister and neighbour correlations in adult income. Our results suggest that the income resemblance between sisters stems more from growing up in the same family than from growing up in the same neighbourhood. We also find that much of the neighbour correlation is explicable in terms of the large income differential between urban and non-urban areas combined with the strength with which urbanicity of childhood neighbourhood predicts urbanicity of adult location. This pattern is subject to a variety of interpretations, but it is quite different from the usual view of neighbourhood effects.
