Sunday, Jan. 8, 2017 1:00 PM – 3:00 PM
- Chair: Daniel McMillen, University of Illinois-Urbana-Champaign
The Cost of Economic Mobility
AbstractIn the past decade and a half, households with “low skills,” defined as lacking a college education, have seen incomes decline in almost all U.S. cities. At the same time, demand for high-skill workers, those with a college degree, has been increasing, particularly in high cost cit-ies. This has led to substantial income inequality in these high cost cities. It has also raised hous-ing costs even further (Moretti 2011; Diamond, 2016). Our study will analyze how the well-being of low-skill households in these high and rising cost cities has been impacted by the in-creased demand for high-skill workers.
AbstractInequality in U.S. housing prices and rents both declined in the mid-20th century, even as home-ownership rates rose. Subsequently, housing-price inequality has risen to pre-War levels, while rent inequality has risen less. Combining both measures, we see inequality in housing consumption equivalents mirroring patterns in income across both space and time, according to an income elasticity of housing demand just below one. These patterns occur mainly within cities, and are not explained by observed changes in dwelling characteristics or locations. Instead, recent increases in housing inequality are driven most by changes in the relative value of locations, seen especially through land.
Difficult Development Areas and the Supply of Low-Income Housing Tax Credit
AbstractThe designation of a metropolitan area as a Difficult Development Area (DDA) by the U.S. Government increases the per-unit generosity of the subsidy that private developers receive for supplying housing units under the Low-Income Housing Tax Credit (LIHTC) program. The top 20% of metropolitan areas ranked by the ratio of rent divided by household income receive the designation, and a resulting 30% increase in subsidy for developers. Regression discontinuity (RD) methods are used to compare how DDA designation affects the quantity, composition, and location of LIHTC units based on the 20% threshold. Increasing the generosity of the subsidy on a per-unit basis through DDA designation results in a 40% decrease in LIHTC units constructed in the metropolitan area. DDA designation is also found to increase competition amongst developers to receive the subsidy and results in LIHTC projects being less likely to be located in low-income neighborhoods.
- R2 - Household Analysis
- R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location