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
|Date received:||30 Nov 2004|
|Date published:||15 Jul 2005|
|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.
Jonathan P. Caulkins - Carnegie Mellon University, United States of America
Gustav Feichtinger - Technische Universität Wien, Austria
Dieter Grass - Technische Universität Wien, Austria
Michael Johnson - Carnegie Mellon University, United States of America
Gernot Tragler - Technische Universität Wien, Austria
Yuri Yegorov - Institut für Höhere Studien – Institute for Advanced Studies (IHS), Austria
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