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An Equilibrium Analysis of the Effects of Neighborhood-Based Interventions on Children

Author

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  • Eric Chyn
  • Diego Daruich

Abstract

This paper studies housing vouchers and urban redevelopment programs by incorporating neighborhood effects into a general equilibrium overlapping-generations model with endogenous location choice and child development. We calibrate the model using US data and estimate impacts of large-scale implementations of rental voucher and place-based subsidy policies. Our core finding is that vouchers generate long-run welfare gains by reducing inequality and generating skill improvements that offset higher taxation and other GE effects. Although vouchers lead to larger welfare gains on average, we find that place-based subsidies may be preferable in cities with constrained housing supply.

Suggested Citation

  • Eric Chyn & Diego Daruich, 2025. "An Equilibrium Analysis of the Effects of Neighborhood-Based Interventions on Children," American Economic Review, American Economic Association, vol. 115(12), pages 4476-4522, December.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:12:p:4476-4522
    DOI: 10.1257/aer.20231679
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    Citations

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    Cited by:

    1. Suzane Bellue, 2023. "Why Don’t Poor Families Move? A Spatial Equilibirum Analysis of Parental Decisions with Social Learning," CRC TR 224 Discussion Paper Series crctr224_2023_472, University of Bonn and University of Mannheim, Germany.
    2. Essi Eerola & Teemu Lyytikäinen & Tuukka Saarimaa & Tuuli Vanhapelto, 2024. "The Incidence of Rent Subsidies: Evidence on Rents, Housing Choices and Supply," CESifo Working Paper Series 11478, CESifo.
    3. Victoria Gregory & Julian Kozlowski & Hannah Rubinton, 2022. "The Impact of Racial Segregation on College Attainment in Spatial Equilibrium," Working Papers 2022-036, Federal Reserve Bank of St. Louis, revised 27 Nov 2024.
    4. Dionissi Aliprantis & Jeffrey Lin, 2026. "Strong Spatial Spillovers Determine Neighborhood Shape and Neighborhood Change," Working Papers 26-11, Federal Reserve Bank of Philadelphia.
    5. Raj Chetty & Rebecca Diamond & Thomas B. Foster & Lawrence F. Katz & Sonya Porter & Matthew Staiger & Laura Tach, 2026. "Creating High-Opportunity Neighborhoods: Evidence from the HOPE VI Program," NBER Working Papers 34720, National Bureau of Economic Research, Inc.
    6. Luke Heath Milsom, 2023. "Moving OpportunityLocal Connectivity and Spatial Inequality," CEPREMAP Working Papers (Docweb) 2303, CEPREMAP.
    7. Veronica Guerrieri & Alessandra Fogli, 2017. "The End of the American Dream? Inequality and Segregation in US cities," 2017 Meeting Papers 1309, Society for Economic Dynamics.
    8. Anson Zhou, 2024. "Teachers and the Evolution of Aggregate Inequality," Working Papers 2024-001, Human Capital and Economic Opportunity Working Group.
    9. Alessandra Fogli & Veronica Guerrieri & Mark Ponder & Marta Prato, 2026. "The Macroeconomic Effects of Neighborhood Policies: a Dynamic Analysis," NBER Working Papers 34754, National Bureau of Economic Research, Inc.
    10. Acerenza, Santiago & Gandelman, Nestor & Misail, Daniel, 2025. "Neighborhood impacts on human capital accumulation of adolescents and young adults in Montevideo," Regional Science and Urban Economics, Elsevier, vol. 111(C).
    11. Wright, Jacob & Zheng, Angela, 2024. "From Preschool to College: The Impact of Education Policies over the Lifecycle," IZA Discussion Papers 17301, IZA Network @ LISER.
    12. Jacob Wright & Angela Zheng, 2024. "From Preschool to College: The Impact of Education Policies over the Lifecycle," Department of Economics Working Papers 2024-07, McMaster University.

    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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