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Title: Why Don't Poor Families Move? A Spatial Equilibrium Analysis of Parental Decisions with Social Learning

Citation Type: Miscellaneous

Publication Year: 2022

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Abstract: In the United States, childhood neighborhood quality shapes adulthood economic opportunities. However, most children raised in bottom-quality neighborhoods still live in low-quality neighborhoods in adulthood. Could childhood neighborhood directly affect adulthood choices? I develop a quantitative spatial model of parental decisions that incorporates a novel mechanism: social learning about the technology of skill formation. Segregation generates information frictions that systematically distort parents' subjective beliefs and behavior. I calibrate the model using several United States representative datasets. The calibrated model matches targeted and non-targeted parental behavior and generates an endogenous distribution of subjective beliefs. I find a relatively modest level of delusion that increases the income Gini index by 3% and the intergenerational rank-rank slope by 12%. A housing voucher policy improves the neighborhood quality of eligible families, raising children's future earnings. When scaling up the policy, long-run and general equilibrium responses in subjective beliefs amplify the policy effects. Inequality reduces, and intergenerational mobility improves.

Url: https://suzannebellue.github.io/research/neighborhoods/Bellue_JMP_Neighborhoods.pdf

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Authors: Bellue, Suzanne

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Data Collections: IPUMS NHGIS, IPUMS Time Use - ATUS

Topics: Migration and Immigration, Population Mobility and Spatial Demography

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