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  4. November 2015
  5. Estimating Neighborhood Choice Models: Lessons from a Housing Assistance Experiment

Estimating Neighborhood Choice Models: Lessons from a Housing Assistance Experiment

  • Sebastian Galiani
  • Alvin Murphy
  • Juan Pantano
American Economic Review
vol. 105, no. 11, November 2015
(pp. 3385-3415)
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Abstract

We use data from a housing-assistance experiment to estimate a model of neighborhood choice. The experimental variation effectively randomizes the rents which households face and helps identify a key structural parameter. Access to two randomly selected treatment groups and a control group allows for out-of-sample validation of the model. We simulate the effects of changing the subsidy-use constraints implemented in the actual experiment. We find that restricting subsidies to even lower poverty neighborhoods would substantially reduce take-up and actually increase average exposure to poverty. Furthermore, adding restrictions based on neighborhood racial composition would not change average exposure to either race or poverty. (JEL I32, I38, R23, R38)

Citation

Galiani, Sebastian, Alvin Murphy, and Juan Pantano. 2015. "Estimating Neighborhood Choice Models: Lessons from a Housing Assistance Experiment." American Economic Review, 105 (11): 3385-3415. DOI: 10.1257/aer.20120737

Additional Materials

JEL Classification

  • I32 Measurement and Analysis of Poverty
  • I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
  • R38 Production Analysis and Firm Location: Government Policy