Although it is widely hypothesized that neighborhood effects are explained by differences in the schools to which children have access, few prior studies have investigated the explanatory role of school quality. In this study, we examine whether school quality mediates or interacts with the effects of neighborhood context on academic achievement. With data from the Early Childhood Longitudinal Study, we operationalize a school’s quality as the difference between the school-year and summer learning rates among its 1st grade students. We then decompose the total effect of neighborhood context on achievement at the end of 3rd, 5th, and 8th grade into components due to mediation versus interaction, which we estimate using novel counterfactual methods. Results indicate that living in a disadvantaged neighborhood substantially reduces academic achievement. But contrary to expectations, we find no evidence that neighborhood effects are mediated by or interact with school quality. The school environment does not mediate the effects of neighborhood context because differences in the socioeconomic composition of neighborhoods are not, in fact, strongly linked with differences in school quality. The school environment also does not interact with neighborhood context because attending a high-quality school is similarly beneficial whether children reside in advantaged or disadvantaged neighborhoods.

Effects of disadvantaged neighborhoods on child educational outcomes likely depend on a family's economic resources and the timing of neighborhood exposures during the course of child development. This study investigates how timing of exposure to disadvantaged neighborhoods during childhood versus adolescence affects high school graduation and whether these effects vary across families with different income levels. It follows 6,137 children in the PSID from childhood through adolescence and overcomes methodological problems associated with the joint endogeneity of neighborhood context and family income by adapting novel counterfactual methods--a structural nested mean model estimated via two-stage regression with residuals--for time-varying treatments and time-varying effect moderators. Results indicate that exposure to disadvantaged neighborhoods, particularly during adolescence, has a strong negative effect on high school graduation and that this negative effect is more severe for children from poor families.