Does Eviction Cause Poverty? Quasi-Experimental Evidence from Cook County, IL
124 Pages Posted: 1 Aug 2019
Date Written: July 21, 2019
Each year, more than two million U.S. households have an eviction case ﬁled against them. Many cities have recently implemented policies aimed at reducing the number of evictions, motivated by research showing strong associations between being evicted and subsequent adverse economic outcomes. Yet it is diﬀicult to determine to what extent those associations represent causal relationships, because eviction itself is likely to be a consequence of adverse life events. This paper addresses that challenge and oﬀers new causal evidence on how eviction aﬀects ﬁnancial distress, residential mobility, and neighborhood quality. We collect the near-universe of Cook County court records over a period of seventeen years, and link these records to credit bureau and payday loans data. Using this data, we characterize the trajectory of ﬁnancial strain in the run-up and aftermath of eviction court for both evicted and non-evicted households, ﬁnding high levels and striking increases in ﬁnancial strain in the years before an eviction case is ﬁled. Guided by this descriptive evidence, we employ two approaches to draw causal inference on the eﬀect of eviction. The ﬁrst takes advantage of the panel data through a diﬀerence-in-diﬀerences design. The second is an instrumental variables strategy, relying on the fact that court cases are randomly assigned to judges of varying leniency. We ﬁnd that eviction negatively impacts credit access and durable consumption for several years. However, the eﬀects are small relative to the ﬁnancial strain experienced by both evicted and non-evicted tenants in the run-up to an eviction ﬁling.
Keywords: Evictions, Financial distress, Poverty
JEL Classification: J01, H00, R38, I30
Suggested Citation: Suggested Citation