Abstract: I document and explain the persistence of household residential choice in Boston during the Great Migration. The in-migration of African Americans was a large demographic shock to existing neighborhood composition. Using novel panel data that tracks individual residential choices, I document stark differences in out-migration responses to this shock among two religious groups. To understand differences in neighborhood attachment, I estimate a dynamic panel data discrete choice model that disentangles state dependence in neighborhood choice from unobserved heterogeneity in preferences for neighborhood characteristics. I find that the differences in the two groups’ out-migration behavior are mostly explained by their differential state dependence. I show that this state dependence is strongly correlated with observable measures of investments in durable local infrastructure, such as the size of religious gathering places and the number of religious schools. My counterfactual policy analysis suggests that maintaining a mixed racial composition of urban neighborhoods in Boston during the relevant period would have required a voucher equivalent to 25 percent of the rent.
Presented at UEA 2022 North American Meeting (Washington, D.C.), Federal Reserve Bank of Philadelphia, 17th EGSC at Washington University in St. Louis
Work in Progress
Abstract: We estimate a dynamic microeconometric model of housing supply in the spatial equilibrium framework. Forward-looking landowners decide how much durable and irreversible housing to add in a given period, knowing that construction exercises a real option over its land inputs and can affect future prices and costs. In our model, transaction prices are endogenous to the future states which also depend on the current actions of other landowners. We show that spatial equilibrium conditions can simplify this dynamic problem. Standard numerical rational expectations methods are then applied to derive approximate solutions to the full dynamic specification. We find that the sensitivity of costs to construction levels drops substantially compared to the case where the evolution of prices is treated exogenously.
Estimating the Impact of Expansionary Credit on Homeownership Rates During a Period of Racial Transition: Evidence from Boston’s BBURG Program (with Charles Loeffler)
Abstract: In response to concerns of racial segregation and related problems in Boston’s housing market, a novel experiment known as BBURG (Boston Banks Urban Renewal Group) program was conducted to dramatically increase the availability of housing financing for previously unqualified buyers. By leveraging the fact that BBURG only targeted specific areas of Boston, we examine the net effects of this expansionary credit policy on homeownership rates with a spatial regression discontinuity design and newly assembled data on homeownership taken from Boston City Directory 1960-1975. We find minimal effect of BBURG on the increase in homeownership rate. At the same time, we find the accelerated white out-migration from BBURG area in this period. We quantify the relationship between these two findings.