BECE. Newsletter 

Vol.15, No.2, 2023, BECE 1815 

 

 

 

 

Neighborhood Effects, Family Capital, and 

Adolescents’ Compulsory Education Outcomes 

By Fang, C. 
Correspondence to: Chao Fang, Nanjing University of Finance and Economics, 

China. E-mail: 99288137@qq.com  

HE State Council of China’s release of the “Decision on Intensifying the 

Reform of Urban Housing System” in 1994 initiated the market-oriented 

reform of housing for urban residents. The reform has caused the increased 

disparities between different types of communities. Education production 

functions establishes the peer effect (community group effect) as one the four 

factors in student development. Despite extant extensive studies on the rela-

tionships between neighborhood effects and family capital and adolescent 

academic performance, there remains room for further research on this topic. 

This article is an empirical analysis of the impact of neighborhood effects 

and family capital on teenagers’ compulsory education outcomes, based on 

the China Education Panel Survey’s data from academic years of 2013-2014 

and 2014-2015.  

Research findings include that: 

i. Neighborhood effects and family capital have positive impacts on teen-

agers’ compulsory education outcomes. Observable factors such as fam-

ily financial and cultural capital play dominant roles in the disparities in 

student academic outcomes at the compulsory education level. 

ii. The conditional quantile regression results showed that there was an N-

shape relation between heterogeneous characteristics of neighborhood 

effects and the increase in cognitive quantiles. Among adolescents with 

similar observable characteristics, factors such as advantaged neighbor-

hood effects as a result of residence in a private property community 

and disadvantaged family background aggravated the inequality in 

compulsory education outcomes on the range of low to high cognitive 

quantiles. Disparities in compulsory education outcomes induced by 

community-related neighborhood effects bore an explicit feature of the 

“sticky floor effect.” Individual-, family-, community-, and school-

related explanatory variables also contributed to the gaps in compulsory 

education outcomes at differential cognitive quantiles. 

iii. Neighborhood effects of the private property community had the poten-

tial to increase adolescents’ cognitive ability by 0.047-0.061 standard 

points. Analytical results of heterogeneous characteristics of neighbor-

hood effects drew a consistent conclusion with the conditional quantile 

T 

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Vol.15, No.2, 2023, BECE 1816 

regression on the impact of neighborhood effects on compulsory educa-

tion outcomes at different cognitive quantiles. 

The study puts forward recommendations as follows. 

 Under the principal of “enrollment in the nearest school,” the ed-

ucational authorities should promote the implementation of mul-

ti-school district policy, which will increase the number of 

schools each neighborhood can reach and boost the opportunities 

for teenagers from underprivileged families to access high-

quality compulsory education.  

 Utilize peer effects and neighborhood effects to support disad-

vantaged adolescents in advancing their academic level and im-

proving their education outcomes. 

 Education departments should formulate and execute the teacher-

rotation system within the school district to alleviate the dispari-

ties in compulsory education outcomes caused by uneven distri-

bution of high-quality educational resources between schools.  

 
Source: Education & Economy, 2023; 39(03):35-44.