Jonathan P. Caulkins
Gustav Feichtinger
Dieter Grass
Michael Johnson
Gernot Tragler
Yuri Yegorov

http://www.demographic-research.org/volumes/vol13/1/

doi:10.4054/DemRes.2005.13.1

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Abstract
A central objective of modern US housing policy is deconcentrating poverty through "housing mobility programs" that move poor families into middle class neighborhoods. Pursuing these policies too aggressively risks inducing middle class flight, but being too cautious squanders the opportunity to help more poor families. This paper presents a stylized dynamicoptimization model that captures this tension. With base-caseparameter values, cost considerations limit mobility programs before flight becomes excessive. However, for modest departures reflecting stronger flight tendencies and/or weaker destination neighborhoods, other outcomes emerge. In particular, we find state-dependence and multiple equilibria, including both de-populated and oversized outcomes. For certain sets of parameters there exists a Skiba point that separates initial conditions for which the optimal strategy leads to substantial flight and depopulation from those for which the optimal strategy retains or even expands the middle class population. These results suggest the value of estimating middle-class neighborhoods' "carrying capacity" for absorbing mobility program placements and further modeling of dynamic response.

Author's affiliation
Jonathan P. Caulkins
Carnegie Mellon University, Pittsburgh, United States of America
Gustav Feichtinger
University of Technology, Vienna, Austria
Dieter Grass
University of Technology, Vienna, Austria
Michael Johnson
Carnegie Mellon University, Pittsburgh, United States of America
Gernot Tragler
University of Technology, Vienna, Austria
Yuri Yegorov
Institute for Advanced Studies, Vienna, Austria

Keywords
housing policy, multiple equilibria, negative externality, optimal control, segregation, separation, Skiba point

Word count (Main text)
9939

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