Evidence of Neighborhood Effects from Moving to Opportunity: LATEs of Neighborhood Quality

Working Paper (Federal Reserve Bank of Cleveland)

Carroll

Young

2019

Self Cite

We reconcile the large and persistent racial wealth gap with the smaller racial earnings gap, using a general equilibrium heterogeneous-agents model that matches racial differences in earnings, wealth, bequests, and returns to savings. Given initial racial wealth inequality in 1962, our model attributes the slow convergence of the racial wealth gap primarily to earnings, with much smaller roles for bequests or returns to savings. Cross-sectional regressions of wealth on earnings using simulated data produce the same racial gap documented in the literature. One-time wealth transfers have only transitory effects unless they address the racial earnings gap.

Section: Resultsmentioning

confidence: 99%

The Dynamics of the Racial Wealth Gap

Working Paper (Federal Reserve Bank of Cleveland)

Carroll

Young

2019

Self Cite

“…Following Aliprantis and Richter (2019), we define neighborhood quality in terms of a neighborhood's poverty rate, employment to population ratio, unemployment rate, high school attainment rate, BA attainment rate, and the share of households with children under 18 that are singleheaded. We measure these variables in terms of the percentiles of their national distributions, and then define neighborhood quality as the percentile of the first principal component of these variables.…”

Section: Datamentioning

confidence: 99%

What Explains Neighborhood Sorting by Income and Race?

Working Paper (Federal Reserve Bank of Cleveland)

Carroll

Young

2019

Self Cite

Why do high-income black households live in neighborhoods with characteristics similar to those of low-income white households? We find that neighborhood sorting by income and race cannot be explained by financial constraints: High-income, high-wealth black households live in similar-quality neighborhoods as low-income, low-wealth white households. We provide evidence that black households sort across neighborhoods according to some non-pecuniary factor(s) correlated with the racial composition of neighborhoods. Black households sorting into black neighborhoods can explain the racial gap in neighborhood quality at all income levels. The supply of high-quality black neighborhoods drives the neighborhood quality of black households.

“…To characterize neighborhoods, we use tract-level data from the 2012-2016 American Community Survey (ACS). We follow Aliprantis and Richter (2018) and measure neighborhood quality as the first principal component of the poverty rate, the unemployment rate, the employed to population ratio, the share with a HS diploma, the share with a BA, and the share of families with children under 18 that are single-headed. Each of these variables is first put into percentiles of the national distribution (in terms of population living in census tracts with these characteristics).…”

Section: Hud and Census Datamentioning

confidence: 99%

Can Landlords Be Paid to Stop Avoiding Voucher Tenants?

Working Paper (Federal Reserve Bank of Cleveland)

Martin

Phillips³

2019

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Despite being eligible for use in any neighborhood, housing choice vouchers tend to be redeemed in low-opportunity neighborhoods. This paper investigates whether landlord behavior contributes to this outcome by studying the recent expansion of neighborhood-based voucher limits in Washington, DC. We conduct two waves of a correspondence experiment: one before and one after the expansion. Landlords heavily penalize tenants who indicate a desire to pay by voucher. The voucher penalty is larger in high-rent neighborhoods, pushing voucher tenants to low-rent neighborhoods. We fi nd no evidence that indexing rents to small areas aff ects landlord acceptance of voucher tenants. The data can reject the claim that increasing rent limits by less than $3,000 per month can eliminate the voucher penalty. Neighborhood rent limits do shift lease-up locations toward high-rent neighborhoods in the year after the policy change, an eff ect that is large relative to the number of voucher households that move but small relative to all voucher tenants.