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  5. Regional Economics and Policy
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Regional Economics and Policy

Paper Session

Sunday, Jan. 5, 2025 10:15 AM - 12:15 PM (PST)

Hilton San Francisco Union Square, Union Square 19 and 20
Hosted By: Society of Government Economists
  • Chair: Cristina Miller, United States Department of Agriculture

Evaluating the Effects of Geographic Adjustments on Poverty Measures Using Self-Reported Financial Well-Being Scores

Jeff Larrimore
,
Federal Reserve Board

Abstract

A central aspect of poverty measurement is how well the measure can identify the people and places that are experiencing financial hardships. This paper explores the relationship between poverty financial hardship by using the CFPB’s financial well-being scale, which reflects individuals’ self-assessments of their financial challenges. Using this measure, for every 1 percentage point increase in a state’s official poverty rate for working-age adults, there is a 0.58 percentage point increase in the share of working-age adults with very low financial well-being. In contrast, the state’s supplemental poverty rate is negatively correlated with the rate of financial hardship using the CFPB measure. These results are due to the geographic cost of living adjustment in the supplemental poverty measure, which cause it to observe greater poverty in areas where financial well-being based on the CFPB score is higher. For those with high-incomes, financial well-being declines as cost of living rises, consistent with the effects of these higher costs on their purchasing power. Yet among those with low-incomes, financial well-being is higher for those living in areas with higher costs of living. This likely reflects that support measures for those with lower incomes in these high-cost areas are offsetting the negative effects of facing higher prices. The results suggest that geographic cost of living adjustments require further study before concluding that they are an enhancement to poverty measurement.

The Effects of State Community Reinvestment Acts on Small Business and Mortgage Lending

Brian H. Witzen
,
Consumer Financial Protection Bureau
Claire Brennecke
,
Consumer Financial Protection Bureau

Abstract

The Federal Community Reinvestment Act (CRA) was enacted to combat redlining and incentivize investment in low-to-moderate income (LMI) areas. Since its passage in 1977, several states have implemented similar legislation at the state-level. In this paper, we investigate the additional effect of these state-level CRAs on small business and mortgage lending in LMI areas. To do so, we extend an empirical strategy from the existing literature on the effects of the federal CRA. This strategy exploits exogenous changes in which census tracts are considered eligible as LMI tracts after regulators recalculate income. After a census tract becomes newly LMI, banks have a new incentive to lend to that tract to receive credit towards their Federal, and potentially State, CRA evaluations. We use a regression discontinuity design framework in a panel setting and compare census tracts close to the LMI definition income threshold. We find that newly LMI census tracts in states with state-level CRAs experience larger increases in small business and mortgage lending relative to tracts in states without state-level CRAs. We also find that banks are more likely to include tracts in their assessment areas after they become LMI and that this effect is much larger in states with state-level CRAs.

Sticky Continuing-Tenant Rents

Joshua Gallin
,
Federal Reserve Board
Lara Loewenstein
,
Federal Reserve Bank of Cleveland
Hugh Montag
,
Bureau of Labor Statistics
Randal J. Verbrugge
,
Federal Reserve Bank of Cleveland

Abstract

Rents are a chief driver of inflation and are central to consumption measurement. However, little is known about how the rents for continuing tenants rents behave or how they react to macroeconomic shocks. In this paper, we study the effects of pricing frictions and stickiness for continuing tenant rents. We perform four analyses. First, we document the frequency of rent changes for continuing tenants, as well as the prevalence of rounding. We associate these behaviors with information frictions. Second, we construct a new continuing tenant rent index. Third, we investigate the link between lagged new tenant and continuing tenant rent changes. Specifically, we study how continuing tenant rents react in response to local changes in new tenant rents. Pricing frictions for continuing tenant rents could induce inflation persistence as landlords slowly converge towards optimal rents. Fourth, we evaluate how continuing tenant rents react to macroeconomic shocks.

Impacts of the USDA Broadband Initiatives Program on Employment and Telework: Evidence from Confidential American Community Survey Microdata

Anil Rupasingha
,
United States Department of Agriculture
John Pender
,
United States Department of Agriculture
Robert Dinterman
,
United States Department of Agriculture

Abstract

The $2.5 billion USDA Broadband Initiatives Program (BIP), established by the American Recovery and Reinvestment Act in 2009, was USDA’s largest broadband program until the current ReConnect program. This study investigates the impacts of BIP on employment and telework using confidential American Community Survey microdata on individual workers, combined with program data and other data. Using a difference-in-difference regression framework, we find that BIP increased the likelihood of employment in the sample of all workers and in subsamples of White workers, male workers, workers in metro areas, high wage workers, workers in service industries, and workers specifically in information services, finance and insurance, and professional services. BIP reduced the likelihood of employment among low or medium wage workers and among workers in trade industries. Regarding impacts on telework, BIP increased the likelihood of working at home among workers employed in professional services. Because our dependent variables are at the worker level and not the business or regional level, and because we control for local labor demand conditions using census tract and year fixed effects, we interpret these results as more likely resulting from labor supply effects than labor demand effects of the program.

Discussant(s)
David Johnson
,
National Academies of Sciences, Engineering, and Medicine
Sisi Zhang
,
Federal Reserve Bank of Philadelphia
Prakash Loungani
,
Johns Hopkins University
Jieun Chang
,
Southwestern Oklahoma State University
JEL Classifications
  • R0 - General
  • G5 - Household Finance