NBER

Peter Bergman, Raj Chetty, Stefanie DeLuca, Nathaniel Hendren, Lawrence F. Katz, Christopher Palmer

Bibliographic Information

NBER Working Paper No. 26164
Issued in August 2019, Revised in March 2020
NBER Program(s):CH, LS, PE

This paper was revised on March 26, 2020

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Abstract

Low-income families in the United States tend to live in neighborhoods that offer limited opportunities for upward income mobility. One potential explanation for this pattern is that families prefer such neighborhoods for other reasons, such as affordability or proximity to family and jobs. An alternative explanation is that they do not move to high-opportunity areas because of barriers that prevent them from making such moves. We test between these two explanations using a randomized controlled trial with housing voucher recipients in Seattle and King County. We provided services to reduce barriers to moving to high-upward-mobility neighborhoods: customized search assistance, landlord engagement, and short-term financial assistance. Unlike many previous housing mobility programs, families using vouchers were not required to move to a high-opportunity neighborhood to receive a voucher. The intervention increased the fraction of families who moved to high-upward-mobility areas from 15% in the control group to 53% in the treatment group. Families induced to move to higher opportunity areas by the treatment do not make sacrifices on other aspects of neighborhood quality, tend to stay in their new neighborhoods when their leases come up for renewal, and report higher levels of neighborhood satisfaction after moving. These findings imply that most low-income families do not have a strong preference to stay in low-opportunity areas; instead, barriers in the housing search process are a central driver of residential segregation by income. Interviews with families reveal that the capacity to address each family's needs in a specific manner — from emotional support to brokering with landlords to customized financial assistance — was critical to the program's success. Using quasi-experimental analyses and comparisons to other studies, we show that more standardized policies — increasing voucher payment standards in high-opportunity areas or informational interventions — have much smaller impacts. We conclude that redesigning affordable housing policies to provide customized assistance in housing search could reduce residential segregation and increase upward mobility substantially.

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