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Working Paper
Re‐assessing the Spatial Mismatch Hypothesis
We use detailed location information from the Longitudinal Employer‐Household Dynamics (LEHD) database to develop new evidence on the effects of spatial mismatch on the relative earnings of Black workers in large US cities. We classify workplaces by the size of the pay premiums they offer in a two‐way fixed effects model, providing a simple metric for defining “good” jobs. We show that: (a) Black workers earn nearly the same average wage premiums as whites; (b) in most cities Black workers live closer to jobs, and closer to good jobs, than do whites; (c) Black workers typically ...
Report
Credit Access and Mobility during the Flint Water Crisis
How do credit-constrained communities cope with the financial consequences of environmental crises? Beginning in April 2014, the residents of Flint, Michigan, were exposed to lead-contaminated water resulting from a series of governmental missteps. In this paper, we use the spatial distribution of lead and galvanized pipes in Flint to study the effect of the crisis on households’ financial health, including loan balances, repayment of outstanding debt, and Equifax Risk Scores, as well as on household mobility. We find that relatively more affected households, as measured by exposure to lead ...
Working Paper
Optimal Income Taxation: An Urban Economics Perspective
We derive an optimal labor income tax rate formula for urban models in which tax rates are determined by traditional forces plus a new term arising from urban forces: house price, migration and agglomeration effects. Based on the earnings distributions and housing costs in large and small US cities, we find that in a benchmark model (i) optimal income tax rates are U-shaped, (ii) urban forces serve to raise optimal tax rates at all income levels and (iii) adopting an optimal tax system induces agents with low skills to leave large, productive cities. While agglomeration effects enter the ...
Working Paper
“Sort Selling”: Political Polarization and Residential Choice
Partisanship and political polarization are salient features of today’s society. We merge deeds records with voter rolls and show that political polarization is more than just “political cheerleading.” Descriptively, homeowners are more likely to sell their homes and move when their next-door neighbors are affiliated with the opposite political party. We use a novel, new-next door neighbor identification strategy along with rich demographic control variables and time by-geography fixed effects to confirm causality. Consistent with a partisanship mechanism, our results are strongest when ...
Working Paper
Bank Branch Access: Evidence from Geolocation Data
Low-income and Black households are less likely to visit bank branches than high-income and White households, despite the former two groups appearing to rely more on branches as means of bank participation. We assess whether unequal branch access can explain that disparity. We propose a measure of bank branch access based on a gravity model of consumer trips to bank branches, estimated using mobile device geolocation data. Residents have better branch access if branches are closer or have superior qualities that attract more visitors. Because the geolocation data is distorted to protect user ...
Working Paper
Mortgage Choice: Interactive Effects of House Price Appreciation and Mortgage Pricing Components
Research has shown evidence of a link between house price appreciation and the selection of mortgage financing options: Higher appreciation is associated with higher take-up rates for adjustable-rate mortgages relative to fixed-rate mortgages. Research also finds that mortgage interest rates and their underlying components are important determinants of take-up rates among mortgage financing options. In this paper we show that house price appreciation can have important interactive effects with those other determinants of mortgage financing outcomes. We focus on the period from 2000 to 2007, ...
Journal Article
Recent developments in home equity lending
The equity that has accumulated in homes is one of the largest components of U.S. household wealth. In recent years, many homeowners have borrowed large amounts against that equity, frequently to finance new consumption expenditures or pay down outstanding consumer debt. In view of the growing importance of home equity credit in household finances, the Federal Reserve has for a number of years participated in nationwide surveys of the use of home equity loans. This article presents findings from a 1997 survey and from other sources of information on home equity lending.
Working Paper
Household Finance Shapes Political Participation: Evidence from Mortgage Refinancing
We study mortgage refinancing during the Great Recession, a period marked by a dislocated housing market, major government programs, and large potential gains from refinancing. Using quasi-experimental variation from movements in mortgage rates and eligibility cutoffs in HARP, we show that borrowers who refinanced between 2009 and 2012 were more likely to vote in the 2012 general election than otherwise similar borrowers who did not refinance. The increase in turnout is concentrated among households that experienced larger payment reductions and among politically independent voters. Our ...
Working Paper
The Macroeconomic Effects of Neighborhood Policies: A Dynamic Analysis
We study the macroeconomic effects of neighborhood-specific policies in a general equilibrium model of a city with endogenous residential sorting and educational investment. A key feature of the model is the presence of endogenous local spillovers that depend on the distribution of families across neighborhoods. We analyze three policies: a housing-voucher policy inspired by the MTO program, which enables poor families to relocate to low-poverty neighborhoods; a place-based transfer (PBT) policy that provides monetary transfers to families in poor neighborhoods; and a place-based investment ...
Working Paper
Household formation over time: evidence from two cohorts of young adults
This paper analyzes household formation in the United States using data from two cohorts of the national Longitudinal Survey of Youth (NLSY)?the 1979 cohort and the 1997 cohort. The analysis focuses on how various demographic and economic factors impact household formation both within cohorts and over time across cohorts. The results show that there are substantial differences over time in the share of young adults living with their parents. Differences in housing costs and business-cycle conditions can explain up to 70 percent of the difference in household-formation rates across cohorts. ...