Frontiers in Spatial Economics
Paper Session
Sunday, Jan. 5, 2025 10:15 AM - 12:15 PM (PST)
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Chairs:
Elisa Giannone, Centre de Recerca en Economia Internacional - Brian Greaney, University of Washington
Creating High-Opportunity Neighborhoods: Evidence from the HOPE VI Program
Abstract
Low-income families tend to live in high-poverty neighborhoods that offer limited oppor-tunities for upward mobility. A scalable approach to increasing economic mobility is to transform low-mobility neighborhoods into high-mobility neighborhoods—bringing opportunity to people where they currently live rather than moving them to opportunity. Federal and local governments have spent billions of dollars over the past few decades on place-based investments, but there is little evidence on the impacts of such programs on economic mobility for the targeted populations. In this paper, we study whether and how one can create high-opportunity neighborhoods by focusing on the HOPE VI program, one of the largest place-based policies implemented by the federal government. Between 1993 and 2010, HUD allocated $6.3 billion across 261 HOPE VI grants. The funds were used to demolish distressed public housing projects, replace them with a mix of market-rate and subsidized units, and create new community programs to support residents. We estimate the effect of the HOPE VI program by comparing projects that received a grant to observably similar projects that were not demolished. We first show that the HOPE VI program led to a large, persistent reduction in poverty rates in targeted neighborhoods, consistent with the findings of prior work. We find that the HOPE VI program caused a large increase in the adult incomes of the children who lived in the public housing units after the award. Children who lived in the revitalized public housing units 10 years after the award earned approximately $2,500 more at age 26 compared to children who lived in the public housing units in the year before the award. We investigate mechanisms causing this effect and find substantial evidence that more integrate social networks between public housing residents and the surrounding community can explain a substantial share of the effect.
The Geography of Innovative Firms
Abstract
A large body of literature has documented that knowledge spillovers between firms are local and decay with distance. In a world with multi-plant firms, such local spillovers imply that a firm's spatial expansion can impact both its own exposure to existing ideas and the spillovers it generates for others, shaping aggregate innovation and growth. We investigate this idea empirically and theoretically. We first provide evidence on the importance of geographical firm expansion for cross-firm spillovers by linking data on firms' geography and patent citations. Using an event-study design, we show that a firm's expansion into a local market increases citations to its existing patents by inventors in that market. Motivated by this evidence, we develop a model in which multi-plant firms can improve their innovation process by accessing ideas across multiple markets. The distribution of these ideas across space depends on the location decisions of all firms in the economy. A key takeaway is that when knowledge spillovers are local and ideas are sufficiently differentiated across firms, innovative firms are too geographically concentrated relative to the social optimum.Dynamic Urban Economics
Abstract
We build a novel dynamic spatial equilibrium model of an urban area. Our model combines key features of quantitative macro-housing models and spatial equilibrium models. It integrates a large number of urban locations, forward-looking households, commuting, migration, uninsurable income risk, and housing tenure choice. Leveraging recent advancements in continuous-time solution methods, we efficiently compute both steady state equilibrium and transitional dynamics. We apply our model to the Portland commuting zone and run counterfactual policy experiments that increase housing supply or introduce transportation improvements. The results show rich patterns of spatial reallocation and city-wide changes, both in the long run and along the transition path. Many of these results are key to understand the impact of shocks and policies, yet cannot be obtained from traditional macro-housing models with limited spatial heterogeneity nor from spatial equilibrium models without risk or dynamics.Living in a Ghost Town
Abstract
We study how depopulation and aging progress across regions within a country and how this process affects economic welfare across regions and generations. Using spatially disaggregated data from Japan for the last 40 years, we document that youths' out-migration accelerated rural depopulation and aging, leading to a decline in rural economic activity. Motivated by this evidence, we develop a dynamic life-cycle spatial equilibrium model of migration decisions. Using the calibrated model, we find that endogenous decline in rural amenities plays a crucial role in the past and future youths' out-migration, and hence accelerates the regional disparity in depopulation and aging. Shutting down cross-regional migration comes at a substantial welfare loss for the youths, while generating limited benefits even for the elderly in rural areas.JEL Classifications
- R2 - Household Analysis
- R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location