The Unassuming Economist

From a paper by Alessandra Fogli, Veronica Guerrieri, Mark Ponder, and Marta Prato:

“Since the 1980s, the US has experienced not only a steady increase in income inequality, but also a contemporaneous rise in residential segregation by income. What is the relationship between inequality and residential segregation? How does it affect intergenerational mobility? We first document a positive correlation between inequality and segregation, both over time and across metro areas. We then develop a general equilibrium model where parents choose the neighborhood where they raise their children and invest in their children’s education. In the model, segregation and inequality amplify each other because of a local spillover that affects the return to education. We calibrate the model to a representative US metro in 1980 and use the micro estimates of neighborhood exposure effects in Chetty and Hendren (2018b) to discipline the strength of the local spillover. We first use the calibrated version of the model to explore the economy’s response to an unexpected skill premium shock. We find that segregation dynamics played a significant role in amplifying the increase in inequality and in dampening intergenerational mobility. We then use the model to explore the effects of policies designed to move poor families to better neighborhoods, like the Moving To Opportunity (MTO) program. We show that scaling up MTO policies induces general equilibrium effects that limit their efficacy.”

From a paper by Nafeesa Yunus:

“This study examines the impact of aggregate oil shocks and disentangled oil shocks on U.S. and seven major securitized real estate markets. Oil is integrated with the markets and leads them over the long-run. The short-run impact of oil shocks on the markets is negative. A disentangled analysis of oil shocks reveals that supply and demand shocks have differential impacts. Over the long-run, supply shocks have little impact, while demand shocks contribute significantly to common trends and lead each market. In the short-run, demand shocks have positive effects on each market, whereas supply shocks have negative but lesser effects.”

From C40 Cities:

“New research from C40 Cities today reveals that making the construction sector more sustainable in cities will generate multiple socio-economic benefits, including the creation of millions of green jobs.

Building greener cities: green job opportunities in clean construction, is the first major piece of work to identify the potential for cities’ workforces of adopting clean construction, presenting a compelling economic case for shifting to clean construction practices. The research, supported by Laudes Foundation and the City of Oslo, and with insights from Building and Woodworkers International, spans seven major cities: Bogotá, London, Madrid, Mexico City, Nairobi, Oslo and Seattle, to give a global perspective on how decarbonising the built environment, responsible currently for close to 40% of global CO2 emissions, can support a stable and healthy workforce and provide opportunities for greater social equity.

Researchers modelled the impact of two scenarios from 2023-2050: first, a city’s continuation of current carbon-intensive construction scenario, and second, a shift towards clean construction (defined as decarbonised, resource-efficient, resilient and socially just built environment and construction systems). The research projects the changes in job numbers and job roles, maps workforce diversity and quality of work, and calculates the investment needed for each.”

Continue reading here.

From a paper by Tobias Herbst, Moritz Kuhn, and Farzad Saidi:

“Houses are the most important asset on American households’ balance sheets, rendering the U.S. economy sensitive to house prices. There is a consensus that credit conditions affect house prices, but to what extent remains controversial, as an expansion in credit supply often coincides with changes in house price expectations. To address this longstanding question, we rely on novel microdata on the universe of mortgages guaranteed under the Veterans Administration (VA) loan program. We use the expansion of eligibility of veterans for the VA loan program following the Gulf War to estimate a long-lived effect of credit supply on house prices. We then exploit the segmentation of the conventional mortgage market from program eligibility to link this sustained house price growth to developments in the initially unaffected segment of the credit market. We uncover a net increase in credit for all other residential mortgage applicants that aligns closely with the evolution of house price growth, which supports the view that credit-induced house price shocks are amplified by beliefs.”

From a post by M. Nolan Gray:

“After a lot of hard work by activists, America’s political class has finally started to accept that we are in a housing crisis that is ruining everything. But what do we mean when we talk about a housing crisis? The reality is that housing market conditions are quite varied across the United States. There is not one single crisis, but three different varieties of housing crisis that require three different policy responses.

• Housing Shortage Crisis: These are the places where there is simply too little housing, of every variety, everywhere in the city. In these places, we urgently need to build more housing, in any form.
• Housing Inaccessibility Crisis: These are the places where housing is cheap by national standards, yet still inaccessible due to low local incomes. In these places, the near-term fix is to build subsidized deed-restricted affordable housing and expand access to housing choice vouchers. The long-term fix is to create the conditions for economic revitalization.”

Continue reading here.