Research

Job market paper

Did Decreasing Residential Segregation Reduce Racial Wealth Inequality? [Latest version]

Following the Fair Housing Act (FHA), which ended lawful housing discrimination in the US in 1968, racial residential segregation declined rapidly, and Black families started to accumulate housing wealth at a faster pace than Whites. In this paper, I examine whether the FHA could jointly explain these two phenomena, and I simulate how the FHA affected racial wealth inequality. I first present three stylized facts, which show that during the 1970s, racial residential segregation started to decline, the relocation of Black families from Black neighborhoods intensified, and average housing wealth increased rapidly among Black families. To investigate whether the FHA supported these changes, I estimate a heterogeneous agent life-cycle OLG model with spatial equilibrium and endogenous house prices. With this model, I simulate how the FHA affected families’ relocation across neighborhoods, neighborhood-level house prices, and the Black and White wealth distribution. Based on my simulation results, the FHA could explain the observed relocation patterns, the decreasing residential segregation, and partly the increasing housing wealth of Black families. My results suggest that the FHA substantially decreased racial wealth inequality at the top while, somewhat unexpectedly, it increased racial wealth inequality between the 2nd and 7th deciles of the wealth distribution.

Working papers

Does Earlier Return to Work Enhance Mothers’ Labor Trajectories? – Evidence on Substitution Effects in Paid Parental Leave [Working paper]
with Anikó Bíró, Lili Márk, and Tímea Laura Molnár

In this paper, we identify the substitution effect in paid parental leave (`PL’), by exploiting a Hungarian reform that affected only the possibility of employment during the receipt of PL benefits, while keeping the overall benefit amounts unchanged. Hungarian mothers whose child turned into their 2nd year of age after 2014 were provided strong incentives to return to the labor market earlier than previous cohorts, since they did not have to give up PL benefits while earning their wage income during their children’s 2nd year of age. Using an Event Study research design with women without births in the control group and Hungarian linked employer-employee data, we find that mothers in eligible cohorts were by 3 percentage points (30 percent) more likely to work 19–24 months after giving birth - but, no further differences exist in their working propensities or its timing. Our results suggest no effects, on average, on mothers’ wages but positive effects on their firms’ average wage premium 3-5 years after giving birth, and that eligible mothers sorted to occupations that require less analytical thinking, stress tolerance, leadership and willingness to take on responsibilities, and involve less time pressure.

Work in progress

Parental Resources and Major Choice
with Tyler Radler and Nikhil Rao

This paper investigates how parental housing wealth affects the college major choice of their children. Since parental resources can insure against labor market risks, children of high-resource parents might choose majors associated with greater labor market risks, steeper earnings profiles or better non-pecuniary amenities. Such an interaction between socioeconomic status and human capital investment decisions could be an important driver of intergenerational inequality. We test these hypotheses by combining surveys of undergraduate students in the United States from the Higher Education Research Institute and spatial variation in housing demand growth between 2000 and 2006. We find that students entering four-year colleges during periods of booming housing demand are more likely to choose risky majors that require higher initial investment and are more likely to report non-pecuniary factors as key reasons for their choice of major. We also find limited evidence of selection into enrolment at four-year colleges. Future work involves linking these first-year student responses to their responses at the end of their college careers to investigate whether the effects on major choice persist throughout college, and if they translate into effects on occupation choice.

The Impact of Slum Clearance on the Cleared: Evidence from US Public Housing
with Mel Stephens and Yvette Zhang