Poor them

Kevin Lewis

April 02, 2019

Do the Poor Pay More for Housing? Exploitation, Profit, and Risk in Rental Markets
Matthew Desmond & Nathan Wilmers
American Journal of Sociology, January 2019, Pages 1090-1124


This article examines tenant exploitation and landlord profit margins within residential rental markets. Defining exploitation as being overcharged relative to the market value of a property, the authors find exploitation of tenants to be highest in poor neighborhoods. Landlords in poor neighborhoods also extract higher profits from housing units. Property values and tax burdens are considerably lower in depressed residential areas, but rents are not. Because landlords operating in poor communities face more risks, they hedge their position by raising rents on all tenants, carrying the weight of social structure into price. Since losses are rare, landlords typically realize the surplus risk charge as higher profits. Promoting a relational approach to the analysis of inequality, this study demonstrates how the market strategies of landlords contribute to high rent burdens in low-income neighborhoods.

The Decline of Cash Assistance and the Well-Being of Poor Households with Children
Luke Shaefer et al.
Social Forces, forthcoming


Since the early 1990s, the social safety net for families with children in the United States has undergone an epochal transformation. Aid to poor working families has become more generous. In contrast, assistance to the deeply poor has become less generous, and what remains more often takes the form of in-kind aid. A historical view finds that this dramatic change parallels others. For centuries, the nature and form of poor relief has been driven in part by shifting cultural notions of which social groups are “deserving” and “undeserving.” This line was firmly redrawn in the 1990s. Did the re-institutionalization of these categorizations in policy have material consequences? This study examines the relationship between the decline of traditional cash welfare between 2001 and 2015 and two direct measures of wellbeing among households with children: household food insecurity and public school child homelessness. Using models that control for state and year trends, along with other factors, we find that the decline of cash assistance was associated with increases in both forms of hardship.

Concrete measures: The rise of public housing and changes in young single motherhood in the U.S.
Katharine Shester, Samuel Allen & Christopher Handy
Journal of Population Economics, April 2019, Pages 369–418


Between 1950 and 1970, the number of public housing units in the United States grew nearly sixfold, and the percentage of births to unmarried women almost tripled. We provide the first estimates of the effect of public housing on single motherhood, using individual-level data to assess whether young women living near higher concentrations of public housing were more likely to have children out of wedlock. We find a strong and positive relationship between public housing and single motherhood for black high school dropouts. This link is larger when we use lagged measures of public housing, which suggests that exposure during childhood may be driving the result.

The Organization of Neglect: Limited Liability Companies and Housing Disinvestment
Adam Travis
American Sociological Review, February 2019, Pages 142-170


Sociological accounts of urban disinvestment processes rarely assess how landlords’ variable investment strategies may be facilitated or constrained by the legal environment. Nor do they typically examine how such factors might, in turn, affect housing conditions for city dwellers. Over the past two decades, the advent and diffusion of the limited liability company (LLC) has reshaped the legal landscape of rental ownership. Increasingly, rental properties are owned by business organizations that limit investor liability, rather than by individual landlords who own property in their own names. An analysis of administrative records and survey data from Milwaukee, Wisconsin, demonstrates that signs of housing disinvestment increase when properties transition from individual to LLC ownership. This increase is not explained by selection on property characteristics or by divergent pre-transfer trends. Results affirm that real estate investors are responsive to changes in the legal environment and that the protective structure of the LLC facilitates housing disinvestment in Milwaukee. Elaborating the role of real estate investors can deepen accounts of neighborhood change processes and help explain variation in local housing conditions. Ultimately, public policies that enable business operators to circumscribe or reallocate risk may generate unintended costs for consumers and the public.

Mentally Spent: Credit Conditions and Mental Health
Qing Hu et al.
NBER Working Paper, February 2019


In light of the human suffering and economic costs associated with mental illness, we provide the first assessment of whether local credit conditions shape the incidence of mental depression. Using several empirical strategies, we discover that bank regulatory reforms that improved local credit conditions reduced mental depression among low-income households and the impact was largest in counties dominated by bank-dependent firms. On the mechanisms, we find that the regulatory reforms boosted employment, income, and mental health among low-income individuals in bank-dependent counties, but the regulatory reforms did not increase borrowing by these individuals.

What is the Relationship between Benefit Conditionality and Mental Health? Evidence from the United States on TANF Policies
Owen Davis
Journal of Social Policy, April 2019, Pages 249-269


This article provides new evidence on the relationship between benefit conditionality and mental health. Using data on Temporary Assistance for Needy Families policies (TANF) – the main form of poverty relief in the United States – it explores whether the mental health of low-educated single mothers varies according to the stringency of conditionality requirements attached to receipt of benefit. Specifically, the article combines state-level data on sanctioning practices, work requirements and welfare-to-work spending with health data from the Behavioral Risk Factor Surveillance System and evaluates the impact of conditionality on mental health over a fifteen-year period (2000 to 2015). It finds that states that have harsher sanctions, stricter job search requirements and higher expenditure on welfare-to-work policies, have worse mental health among low-educated single mothers. There is also evidence that between-wave increases in the stringency of conditionality requirements are associated with deteriorations in mental health among the recipient population. It is suggested that these findings may reflect an overall effect of ‘intensive conditionality’, rather than of the individual variables per se. The article ends by considering the wider implications for policy and research.

Tribal Gaming and Educational Outcomes in the Next Generation
Owen Thompson
Journal of Policy Analysis and Management, forthcoming


Following a series of federal policy changes and court rulings in the late 1980s, over 400 casinos owned by Native American tribes were opened throughout the United States, and expanded tribal gaming has transformed the economic development trajectories of many American Indian tribes. While most existing evaluations of tribal gaming's impacts focus on contemporaneous effects, the present paper evaluates whether the advent of tribal casinos affected educational outcomes in the subsequent generation of American Indian children. I assemble data on the adult educational outcomes of 11,647 American Indians across 36 counties who were children when a local casino was opened. I use these data to compare individuals who were relatively young at the time of a casino opening, and therefore had greater exposure to post‐gaming socioeconomic conditions, and individuals who were from the same county but were relatively old at the time of a casino opening, while also exploiting differences in the relative sizes of tribal gaming operations. Using this approach, I estimate that exposure to an average‐sized gaming operation during childhood increased adult educational attainment by .328 years and increased the probability of high school graduation and post‐secondary degree completion by 5 to 14 percent. No substantive improvements in adult educational outcomes are observed among white children from the same counties. The magnitudes of the estimates imply a relationship between family income during childhood and educational achievement that is similar to previous research within other low‐income populations.

Effects of a two-generation human capital program on low-income parents’ education, employment, and psychological wellbeing
Lindsay Chase-Lansdale et al.
Journal of Family Psychology, forthcoming


Two-generation human capital programs for families provide education and workforce training for parents simultaneously with education for children. This study uses a quasi-experimental design to examine the effects of a model two-generation program, CareerAdvance, which recruits parents of children enrolled in Head Start into a health care workforce training program. After 1 year, CareerAdvance parents demonstrated higher rates of certification and employment in the health care sector than did matched-comparison parents whose children were also in Head Start. More important, there was no effect on parents’ short-term levels of income or employment across all sectors. CareerAdvance parents also experienced psychological benefits, reporting higher levels of self-efficacy and optimism, in addition to stronger career identity compared with the matched-comparison group. Notably, even as CareerAdvance parents juggled the demands of school, family, and employment, they did not report higher levels of material hardship or stress compared with the matched-comparison group. These findings are discussed in terms of the implications of a family perspective for human capital programs.

Disability and Distress: The Effect of Disability Programs on Financial Outcomes
Manasi Deshpande, Tal Gross & Yalun Su
NBER Working Paper, March 2019


We provide the first evidence on the relationship between disability programs and markers of financial distress: bankruptcy, foreclosure, eviction, and home sale. Rates of these adverse financial events peak around the time of disability application and subsequently fall for both allowed and denied applicants. To estimate the causal effect of disability programs on these outcomes, we use variation induced by an age-based eligibility rule and find that disability allowance substantially reduces the likelihood of adverse financial events. Within three years of the decision, the likelihood of bankruptcy falls by 0.81 percentage point (30 percent), and the likelihood of foreclosure and home sale among homeowners falls by 1.7 percentage points (30 percent) and 2.5 percentage points (20 percent), respectively. We find suggestive evidence of reductions in eviction rates. Conversely, the likelihood of home purchases increases by 0.86 percentage point (20 percent) within three years. We present evidence that these changes reflect true reductions in financial distress. In our model of optimal disability benefits, considering these extreme events increases optimal disability benefits and potentially shortens waiting times.

Can Landlords Be Paid to Stop Avoiding Voucher Tenants?
Dionissi Aliprantis, Hal Martin & David Phillips
Federal Reserve Working Paper, January 2019


Despite being eligible for use in any neighborhood, housing choice vouchers tend to be redeemed in low-opportunity neighborhoods. This paper investigates whether landlord behavior contributes to this outcome by studying the recent expansion of neighborhood-based voucher limits in Washington, DC. We conduct two waves of a correspondence experiment: one before and one after the expansion. Landlords heavily penalize tenants who indicate a desire to pay by voucher. The voucher penalty is larger in high-rent neighborhoods, pushing voucher tenants to low-rent neighborhoods. We find no evidence that indexing rents to small areas affects landlord acceptance of voucher tenants. The data can reject the claim that increasing rent limits by less than $3,000 per month can eliminate the voucher penalty. Neighborhood rent limits do shift lease-up locations toward high-rent neighborhoods in the year after the policy change, an effect that is large relative to the number of voucher households that move but small relative to all voucher tenants.

A marginal cost analysis of a big brothers big sisters of America youth mentoring program: New evidence using statistical analysis
Natalia Alfonso et al.
Children and Youth Services Review, June 2019, Pages 23-32


The objective of this study was to evaluate the cost of serving one additional youth in the Big Brothers Big Sisters of America (BBBS) program. We used a marginal cost approach which offers a significant improvement over previous methods based on average total cost estimates. The data consisted of eight years of monthly records from January 2008 to August 2015 obtained from program administrators at one BBBS site in the Mid-Atlantic. Results show that the BBBS marginal cost to serve one additional youth was $80 per mentor-month of BBBS mentoring (irrespective of program type). The cost to offer services for the average match duration of 19 months per marginal added youth was $1503. The marginal costs per treated program participant in school-based versus community-based programs were $1199 and $3301, respectively. Marginal cost estimates are in the range of youth mentoring programs with significant returns on investment but are substantially higher than prior BBBS unit cost estimates reported using less robust estimation methods. This cost analysis can better inform policy makers and donors on the cost of expanding the scale of local BBBS programs as well as suggest opportunities for cost savings.

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