Does Eviction Cause Poverty? Quasi-Experimental Evidence from Cook County, Il

124 Pages Posted: 12 Aug 2019

See all articles by John Eric Humphries

John Eric Humphries

Yale University, Department of Economics

Nicholas Mader

Chapin Hall at the University of Chicago

Daniel Tannenbaum

University of Nebraska at Lincoln - Department of Economics

Winnie van Dijk

University of Chicago - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: July 21, 2019

Abstract

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

Humphries, John Eric and Mader, Nicholas and Tannenbaum, Daniel and van Dijk, Winnie, Does Eviction Cause Poverty? Quasi-Experimental Evidence from Cook County, Il (July 21, 2019). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2019-104. Available at SSRN: https://ssrn.com/abstract=3435829 or http://dx.doi.org/10.2139/ssrn.3435829

John Eric Humphries

Yale University, Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

HOME PAGE: http://www.johnerichumphries.com

Nicholas Mader

Chapin Hall at the University of Chicago ( email )

1313 E. 60th St.
Chicago, IL 60637
United States

Daniel Tannenbaum

University of Nebraska at Lincoln - Department of Economics ( email )

Lincoln, NE 68588-0489
United States

Winnie Van Dijk (Contact Author)

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

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