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  5. Neighborhoods and Urban Dynamics (2)
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Neighborhoods and Urban Dynamics (2)

Paper Session

Friday, Jan. 3, 2025 2:30 PM - 4:30 PM (PST)

San Francisco Marriott Marquis, Nob Hill C
Hosted By: American Real Estate and Urban Economics Association
  • Chair: Vinicios Sant'Anna, Massachusetts Institute of Technology

The Bronx is Burning: Urban Disinvestment Effects of Fair Access to Insurance Requirements Plans

Ingrid Gould Ellen
,
New York University
Daniel Hartley
,
Federal Reserve Bank of Chicago
Jeffrey Lin
,
Federal Reserve Bank of Philadelphia
Wei You
,
Peking University

Abstract

"The withdrawal of private property insurers from central urban neighborhoods in the 1950s

and 1960s prompted Congress to authorize Fair Access to Insurance Requirements (FAIR)

plans. These state plans were offered to property owners denied insurance in the private market. Nineteen states offered FAIR plans by the end of 1968; twenty-four declined to participate through the late 1980s. Several FAIR plan features combined to invite moral hazard and housing disinvestment in declining urban neighborhoods, including (i) Federal underwriting restrictions on considering “environmental hazards,” (ii) risk pooling across insurers, and (iii) payouts exceeding market value. FAIR plans were thus contemporaneously blamed for the wave of arson that swept across U.S. cities in the 1970s. We evaluate these claims using a triple-difference design. We compare dynamics (1) before and after state FAIR participation of (2) neighborhoods likely to have been offered FAIR plans versus those not. Finally, we compare this difference to (3) an analogous within-city, cross-neighborhood contrast in states where FAIR plans were not offered in the 1970s. FAIR plans led to significant housing disinvestment and declines in central neighborhood population and income in the late 1960s and 1970s."

Does Opportunity Come with Trade-Offs? The Impact of Small Area Fair Market Rents on Search Outcomes

Ingrid Gould Ellen
,
New York University
Katherine O'Regan
,
New York University
Sarah Strochak
,
New York University

Abstract

While housing choice vouchers reduce the risk of homelessness, lower cost burdens and alleviate crowding, the program has been less successful in helping low-income households move to economically diverse neighborhoods. More fundamentally, about 40% of households who receive vouchers are not able to use them at all, due to the difficulty of finding and leasing a home on the private market. Researchers have yet to consider whether reforms designed to address one of these shortcomings (the limited set of neighborhoods reached by voucher holders) have the unintended consequence of undermining progress on the other weakness of the program (the large share of voucher recipients who fail to successfully use them). We examine such potential trade-offs in the context of switching from setting rent ceilings at the metropolitan area level to setting them at the ZIP Code level (Small Area Fair Market Rents, or SAFMRs). We find that SAFMRs helped voucher holders lease homes in neighborhoods with higher rents and lower poverty rates. We find little evidence that the adoption of SAFMRs affected the success new recipients had in using their vouchers. We show that voucher recipients may have adjusted along different margins in ways that helped avoid such a trade-off.

The Consequences of COVID-19 for School Choice and Transportation

Jeffrey Zabel
,
Tufts University
Amy Schwartz
,
University of Delaware
Sarah Cordes
,
Temple University
Samantha Trajkovski
,
St. Michaels College

Abstract

There is growing evidence of a negative impact of COVID-19 on the academic performance of school-aged children and a widening of racial/SES disparities. The promise of school choice to reduce these disparities relied, to some extent, on the willingness and ability of families, particularly poor families, to travel farther to attend better schools outside their neighborhood. Unfortunately, COVID-19 may have reduced this willingness or ability to travel, or to attend schools outside their community. Given well-documented differences in the location of and access to high quality schools by race/ethnicity and income, such changes could have important consequences for educational inequality. This paper compares the middle school choices of 6th grade students in New York City before the Pandemic and after schools reopened, focusing on changes in demographics, school quality, distance to school, and whether students are eligible to ride the bus to school and the consequences these changes had for segregation and educational inequality. The surprising takeaway is that, if anything, the changes in these characteristics were the opposite of what was expected. For example: the distance to school and the size of the 6th grade school choice sets increased after the reopening of schools.

Childhood Neighbourhood Quality and Educational Outcomes: How and for Whom Do Neighbourhoods Matter?

Yaroslav Yakymovych
,
Uppsala University
Matz Dahlberg
,
Uppsala University
Torsten Santavirta
,
University of Helsinki
Majken Stenberg
,
Uppsala University

Abstract

We study the association between childhood conditions and university enrolment and aim to understand how much of the systematic variation in this outcome can be explained by family-related as compared to location-related factors. We leverage very detailed register data to thoroughly describe children's family and neighborhood environments from birth into the teenage years. To isolate systematic predictors of university enrolment in a data-driven way, we apply the generalized random forest, a nonparametric machine learning approach. While some location-related factors are powerful predictors of university enrolment, they do not provide additional predictive power conditional on family characteristics. Observed family characteristics explain 78 percent of the rural-urban university enrolment gap and 87 percent of the gap between city neighborhoods with high and low socioeconomic status. As not all family characteristics are observed, the remaining gap provides an upper bound for the importance of location factors. Although much smaller than the unadjusted gap, it remains economically and statistically significant. The unexplained gap is larger for children from lower-status families in the urban-rural case and for children from higher-status families in the within-city case. The results suggest that policies aimed at achieving equality of opportunity should focus on disadvantaged families rather than disadvantaged locations.

Discussant(s)
Kenneth Whaley
,
University of South Florida
Robert French
,
Harvard University and University of Chicago
Alison Lodermeier
,
Brown University
Laura Weiwu
,
Massachusetts Institute of Technology and Stanford University
JEL Classifications
  • R0 - General