Neighborhood Effects and Housing Vouchers
53 Pages Posted: 25 Jan 2017 Last revised: 22 Jun 2020
Date Written: 2017-01-11
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 â€œchild 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.
Keywords: Demographics, Neighborhood Choice, Neighborhood Effects, Moving to Opportunity, Poverty, Vouchers
JEL Classification: I31, I38, J13, R23, R38
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