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Neighborhood Choices, Neighborhood Effects and Housing Vouchers

Author

Listed:
  • Morris A. Davis
  • Jess Gregory
  • Daniel Hartley
  • Kegon T. K. Tan

Abstract

We study how households choose neighborhoods, how neighborhoods affect child ability, and how housing vouchers influence neighborhood choices and child outcomes. We use two new panel data sets with tract-level detail for Los Angeles county to estimate a dynamic model of optimal tract-level location choice for renting households and, separately, the impact of living in a given tract on child test scores (which we call ?child ability\\" throughout). We simulate optimal location choices and changes in child ability of the poorest households in our sample under various housing-voucher policies. We demonstrate that a Moving-to-Opportunity type voucher, in which people residing in high poverty tracts are given a voucher to move to low-poverty tracts, does not affect child ability as households use the voucher to move to relatively inexpensive, low-impact neighborhoods. When vouchers are restricted such that they can only be applied in tracts with large effects on children, we demonstrate the total benefits of any voucher less than $700 per month exceed the costs and the voucher that maximizes total social surplus is $300 per month.

Suggested Citation

  • Morris A. Davis & Jess Gregory & Daniel Hartley & Kegon T. K. Tan, 2017. "Neighborhood Choices, Neighborhood Effects and Housing Vouchers," Working Paper Series WP-2017-2, Federal Reserve Bank of Chicago, revised 11 Jan 2017.
  • Handle: RePEc:fip:fedhwp:wp-2017-02
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    Cited by:

    1. Steven N. Durlauf & Ananth Seshadri, 2018. "Understanding the Great Gatsby Curve," NBER Macroeconomics Annual, University of Chicago Press, vol. 32(1), pages 333-393.
    2. Jee W. Hwang & Chun Kuang & Okmyung Bin, 2019. "Are all Homeowners Willing to Pay for Better Schools? ─ Evidence from a Finite Mixture Model Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 58(4), pages 638-655, May.
    3. David Albouy & Gabriel Ehrlich & Yingyi Liu, 2016. "Housing Demand, Cost-of-Living Inequality, and the Affordability Crisis," NBER Working Papers 22816, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Vouchers; Demographics; Moving to Opportunity; Poverty; Neighborhood Choice; Neighborhood Effects;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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