Urban sociologists have long studied neighborhood inequality and its implications for residents’ life chances. Focusing on marginalized communities, qualitative scholars have illuminated how low educational expectations, destructive social norms and a lack of formal resources limit residents’ socioeconomic outcomes. Quantitative scholars then employ these observations to explain the correlations they find between neighborhoods and residents’ wellbeing. Yet, the most common measurements of neighborhood effects do not operationalize the multifaceted and nonlinear relationship between residential communities and residents’ socioeconomic outcomes. This dissertation is an in depth investigation into how neighborhood effects are measured and the theoretical and policy implications of these measurements. Organizationally, this dissertation is divided into three empirical studies. The first combines longitudinal geo-coded surveys from both the United States and Germany—the U.S. Panel Study of Income Dynamics and the German Socio-Economic Panel—with national censuses, governmental reports and information on local businesses and finds neighborhood socioeconomic status and institutional resources are not always correlated and operate differently across national contexts. Building off these findings, the second study examines the nonlinear relationship between neighborhood socioeconomic status and residents’ outcomes. Findings suggest neighborhood effects are strongest in advantaged communities. Finally, the third empirical piece in this dissertation examines the tipping points used to classify concentrated poverty. Results indicate the void of poverty—not its excess—drives the relationship between residential context and socioeconomic status. The dissertation concludes with a discussion about the theoretical and policy implications of these findings.