Racial Inequality, Neighborhood Effects, and Moving to Opportunity
Moving to Opportunity (MTO) was a housing mobility program designed to investigate neighborhood effects, the influences of the social and physical environment on human development and well-being. Some of the results from MTO have been interpreted as evidence that neighborhood effects are not as strong as earlier evidence had indicated. This Commentary discusses new research suggesting that neighborhood effects are, on the contrary, as strong and policy relevant as suspected before the experiment. This Commentary also discusses why the interpretation of the MTO data is important: If ...
The Dynamics of the Racial Wealth Gap
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 ...
The Opioid Epidemic and the Labor Market
Drug overdoses now account for more deaths in the United States than traffic deaths or suicides, and most of the increase in overdose deaths since 2010 can be attributed to opioids--a class of drugs that includes both prescription pain relievers and illegal narcotics. We look at trends in drug use and overdose deaths to document how the opioid epidemic has evolved over time and to determine whether it could be large enough to impact the labor force.
Landlords and Access to Opportunity
Landlords in high-opportunity neighborhoods screen out tenants using vouchers. In our correspondence experiment, signaling voucher status cuts landlord responses in half. This voucher penalty increases with posted rent and varies little with signals of tenant quality and race. We repeat the experiment after a policy change and test how landlords respond to raising voucher payment limits by $450 per month in high-rent neighborhoods. Most landlords do not change their screening behavior; those who do respond are few and operate at small scale. Our results suggest a successful, systematic policy ...
What Is the Equity-Efficiency Tradeoff when Maintaining Wells in Rural Haiti?
This paper quantitatively compares water infrastructure interventions that prioritize equity with those that prioritize efficiency. The community-based model developed by Haiti Outreach (HO) trains communities to operate and maintain wells, and has clear effi ciency gains over the status quo aid model in Haiti that gives communities wells: HO?s wells were 8.7 percentage points more likely to be functioning after one year than similarly-constructed wells managed under the status quo model. Because HO?s model includes user fees, which raise concerns about equity, I quantify the ...
Human capital in the inner city
Black males in the United States are exposed to tremendous violence at young ages: In the NLSY97 26 percent report seeing someone shot by age 12, and 43 percent by age 18. This paper studies how this exposure to violence and its associated social isolation affect education and labor market outcomes. I use Elijah Anderson?s ethnographic research on the ?code of the street? to guide the specification of a model of human capital accumulation that includes street capital, the skills and knowledge useful for providing personal security in neighborhoods where it is not provided by state ...
Neighborhood Dynamics and the Distribution of Opportunity
Wilson (1987) argued that policies ending racial discrimination would not equalize opportunity without addressing residential sorting and neighborhood externalities. This paper studies related counterfactual policies using an overlapping-generations dynamic general equilibrium model of residential sorting and intergenerational human capital accumulation. In the model, households choose where to live and how much to invest toward the production of their child?s human capital. The return on parents? investment is determined in part by the child?s ability and in part by an externality determined ...
Measuring Deaths from COVID-19
Medical data are new to the analyses and deliberations of Federal Reserve monetary policymakers, but such data are now of primary importance to policymakers who need to understand the virus’s trajectory to assess economic conditions and address the virus’s impacts on the economy. The number of deaths caused by COVID-19 is one key metric that is often referred to, but as with other COVID metrics, it is a challenge to measure accurately. We discuss the issues involved in measuring COVID-19 deaths and argue that the change in the number of directly observed COVID-19 deaths is the most ...
When should children start school?
Kindergarten-entrance-age effects are difficult to identify due to the nonrandom allocation of entrance-age and simultaneous relative-age effects. This paper presents evidence that instrumental variable frameworks do not identify age effects for the youngest children of a cohort using the results of statistical tests for essential heterogeneity in initial enrollment decisions. Restricting attention to the oldest children in a cohort yields a sample with quasirandom variation in entrance and relative ages. This variation is used to identify the parameters of education production functions in ...
Local average neighborhood effects from moving to opportunity
This paper estimates Local Average Treatment Effects (LATEs) of neighborhood quality from the Moving to Opportunity (MTO) housing mobility experiment in a generalized model with multiple treatment levels. We propose a new approach to identifying parameters that exploits the identification of unobservables in the multi-level model. The variation in neighborhood quality induced by MTO only allows us to identify LATEs of moving from the first to the second decile of the national distribution of quality, but in other applications the approach may allow for the estimation of Marginal Treatment ...