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A model is developed which shows that even if central city youths are exposed to middle class role models, if the observed role models are different from themselves with respect to such income-altering characteristics as race, these youths may have difficulty in isolating the earnings effects of education.

Three primary empirical questions raised by Wilson's hypothesis are addressed using the NLSY data: (1) Do youths in urban poverty neighborhoods (defined as urban ZIP Code areas with 1980 poverty rates above 30 percent) have less information about the labor market than youths from other areas? Simple analysis-of-variance procedures indicate that the answer to this question is yes, and that these differences are statistically significant. (2) Does residence within a concentrated urban poverty neighborhood per se depress labor market information, or are information differences due primarily to characteristics such as race and socioeconomic status? Results derived using both naive and two-stage estimation procedures suggest that neighborhoods do not appear to affect information for the NLSY sample as a whole. However, urban poverty area residence did seem to negatively influence the information of youths from families that had received welfare. These results may suggest that neighborhoods become more important as sources of labor market information for youths as their families becomes less so. (3) Does the information a youth has about the labor market influence educational outcomes? Both naive and two-stage estimation procedures suggest that the information which youths have about the labor market may influence their likelihood to graduate from high school and their eventual total years of school completed, even after controlling for individual, family, neighborhood and school characteristics.