Volume 13 - Article 1 | Pages 1-34

Placing the poor while keeping the rich in their place: Separating strategies for optimally managing residential mobility and assimilation

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

Print this page  Send this article to a friend  Twitter


Date received:30 Nov 2004
Date published:15 Jul 2005
Word count:9939
Keywords:housing policy, multiple equilibria, negative externality, optimal control, segregation, separation, Skiba point


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 [Email]
Gustav Feichtinger - Vienna University of Technology, Austria [Email]
Dieter Grass - University of Technology, Vienna, Austria [Email]
Michael Johnson - Carnegie Mellon University, Pittsburgh, United States of America [Email]
Gernot Tragler - University of Technology, Vienna, Austria [Email]
Yuri Yegorov - Institute for Advanced Studies, Vienna, Austria [Email]

Other articles by the same author/authors in Demographic Research

» The reproductive value as part of the shadow price of population
Volume 24 - Article 28

» Keeping a learned society young
Volume 20 - Article 22

Most recent similar articles in Demographic Research

» Sex composition of children, parental separation, and parity progression: Is Finland a Nordic outlier?
Volume 30 - Article 2    | Keywords: separation

» Register-based estimates of parents' coresidence in Sweden, 1969-2007
Volume 29 - Article 42    | Keywords: separation

» Family dynamics and housing: Conceptual issues and empirical findings
Volume 29 - Article 14    | Keywords: separation

» Divorce risk factors and their variation over time in Spain
Volume 24 - Article 31    | Keywords: separation

» Family life in power couples.: Continued childbearing and union stability among the educational elite in Sweden, 1991–2005
Volume 23 - Article 30    | Keywords: separation