This dissertation study examines the associations between neighborhood economic conditions and children's probability of dropping out of high school before completion and female teenagers' likelihood of giving birth before age 20. This dissertation study makes two major contributions to the current literature. First, by taking a longitudinal view of neighborhood socioeconomic situations, this research has demonstrated the advantage and importance of examining the impact of socioeconomic situations in which children are embedded during their entire childhood. Comparing the results from this study with those from using point-in-time measures of neighborhood conditions, I have found estimates of neighborhood effects using longitudinal measures are larger and more efficient. Second, unlike prior research that has focused on neighborhood poverty, this study examines three important dimensions of neighborhood economic conditions: poverty, affluence, and economic segregation by using the index of concentration at the extremes.

Each of the dimensions has different impact on children's probabilities of quitting high school early and becoming teenage mothers. Neighborhood poverty is curvilinearly related to children's likelihood of dropping out of high school while neighborhood affluence and ICE have linear impact on children's educational attainment. For teenage childbirth outcome, effects of all three economic dimensions are linear. Substantial racial differences in response to neighborhood economic impact have been discovered. Results confirm the prior findings that white children are more responsive to neighborhood affluence. Holding constant individual and family characteristics, and influence from neighborhood racial composition, black children may fare better in their academic achievement than white children. This study fails to provide substantial support for relative deprivation and competition mechanisms of neighborhood economic influence. The neighborhood impact is mainly channeled through social isolation avenue.

Family economic conditions and the educational attainment of family heads have strong impact on both of the children's outcomes. Residential mobility has negative impact on children's school performance but not on their health risk of teenage childbirth.