Working Paper Series

  • The Effects of Residential Segregation during Childhood on Life Chances

    Rucker Johnson

    Goldman School of Public Policy Working Paper (May 2012)

    Human capital accumulation may depend on the neighborhood in which one grows up through a
    variety of channels, including access to school resources, health and social service funding,
    neighborhood crime, peer and role model effects, proximity to a chemical dumping ground or
    related environmental hazards, and connectedness to job networks and informal sources of
    support. This paper provides new causal estimates of the effects of racial residential segregation
    during childhood on subsequent adult attainment outcomes. I account for the potential
    endogeneity of segregation and neighborhood location choice using instrumental variables based
    on 19th Century railroad track configurations, historical migration patterns, political factors, and
    topographical features. Following Ananat (2011), it is shown that cities that were subdivided by
    railroads into a greater number of physically-defined neighborhoods became significantly more
    segregated after the Great Migration of African-Americans to northern and western cities. To
    examine the consequences of segregation during childhood, this study analyzes the life
    trajectories of children born since 1950 and followed through 2009. Data from the Panel Study
    of Income Dynamics (PSID) spanning four decades are linked with information on neighborhood
    attributes and school quality resources that prevailed at the time these children were growing up.
    Results from 2SLS/IV models demonstrate that, for blacks, the level of racial residential
    segregation during childhood negatively impacts subsequent educational attainment, reduces the
    likelihood of high school graduation, increases the probability of incarceration, reduces adult
    earnings and the likelihood of intergenerational mobility, increases the annual incidence of
    poverty in adulthood, and leads to worse health status in adulthood; segregation effects for
    whites were not statistically significant across each of these outcomes but the point estimates were
    in the opposite direction of the corresponding estimates for blacks. The results are consistent
    with prior research that has found that increased segregation leads to more inequality in spending
    across districts of the same MSA, thus worsening the relative position of poorer districts.

  • Economic returns to energy-efficient investments in the housing market: Evidence from Singapore

    John Quigley, Yongheng Deng, Zhiliang Lia

    Goldman School of Public Policy Working Paper: GSPP10-103 (May 2012)

    Since January of 2005, 250 building projects in the City of Singapore have been awarded the Green Mark for
    energy efficiency and sustainability. This paper analyzes the private returns to these investments, evaluating
    the premium in asset values they command in the market. We analyze almost 37,000 transactions in the
    Singapore housing market to estimate the economic impact of the Green Mark program on Singapore's
    residential sector.

    We adopt a two-stage research design; in the first stage, a hedonic pricing model is estimated based on
    transactions involving green and non-green residential units in 697 individual projects or estates. In the
    second stage, the fixed effects estimated for each project are regressed on the location attributes of the
    projects, as well as control variables for a Green Mark rating. Our results suggest that the economic returns to
    green building are substantial.

    This is one of the first analyses of the economics of green building in the residential sector, and the only one
    analyzing property markets in Asia. Our results provide insight about the operation of the housing market in
    one country, but the policy implications about the economic returns to sustainable investments in the
    property market may have broader applications for emerging markets in Asia.

  • The Grandchildren of Brown: The Long Legacy of School Desegregation

    Rucker Johnson

    Goldman School of Public Policy Working Paper (March 2012)

    In the US, there is a high degree of persistence in economic status and health status across
    generations, particularly in the lower and upper tails of the income distribution. For example, it
    has been shown that 42 percent of men raised in the bottom quintile of incomes remain there as
    adults, while only 8 percent of US men at the bottom rise to the top quintile (Jantti et al., 2007).
    While public policies that promote equalization of educational opportunity have been
    emphasized as keys to break the intergenerational cycle of poverty, there exists limited causal
    evidence of the mechanisms that underlie intergenerational immobility. Few studies have
    attempted to isolate the causal effect of education on the next generation’s well-being. This is in
    part due to formidable empirical challenges that arise from the paucity of large nationallyrepresentative data sets with information both on parental and child outcomes over the life cycle, and the difficult search for a credible identification strategy.

    This paper uses the Panel Study of Income Dynamics spanning 4 decades (PSID: 1968-2009) to
    link three generations of adult outcomes. The analyses exploit the historical period and quasirandom timing of court-ordered school desegregation to quantify the extent to which children’s well-being can be improved by increased parental education and document the intergenerational
    returns to education. The first stage of the analysis (using the “parent sample” that consists of
    cohorts born between 1950-1970) builds on prior findings that demonstrate for blacks, school
    desegregation significantly increased educational attainment, with no significant desegregation
    effects on whites’ educational outcomes (Johnson, 2011). The present study provides new
    evidence on the causal influence of parental education across generations by using the timing of
    initial court orders and resultant differences in childhood exposure to school desegregation as an
    instrument for parental education, linked (in the second stage) with their children’s subsequent
    life outcomes (using the “child sample” that consists of cohorts born since 1980). The 2SLS/IV
    framework and intergenerational research design utilized enables this work to assess the impact
    of school desegregation on children and their families into the third generation. I find a
    considerable impact of school desegregation that persists to influence the outcomes of the next
    generation, including increased math and reading test scores, reduced likelihood of grade
    repetition, increased likelihood of high school graduation and college attendance, improvements
    in college quality/selectivity, and increased racial diversity of student body at their selected
    college. The findings demonstrate that part of the intergenerational transmission of inequality
    can be attributable to school quality related influences. The results in turn highlight parental
    education as a causal determinant of generational mobility.

  • School Quality and the Long-run Effects of Head Start

    Rucker Johnson

    Goldman School of Public Policy Working Paper (March 2012)

    This paper contributes to the Head Start literature by providing a unified evaluation of long-run impacts on adult outcomes across several domains. In addition to the extensive literature on the impacts of Head Start on test scores, the present study builds on and contributes to a burgeoning literature investigating long-term impacts of early life interventions (childhood programs in the first decade of life). The paper’s results complement the findings of studies on the long-term impacts of other early childhood interventions, such as the Perry and Abecederian preschool demonstrations, Nurse-Family Partnership, and kindergarten class size in the Tennessee STAR experiment (Chetty et al., 2010), which also find lasting impacts on adult outcomes despite fade-out on test scores.

  • Certified to migrate: Property rights and migration in rural Mexico

    Alain de Janvry, Kyle Emerick, Marco Gonzalez-Navarro, Elisabeth Sadoulet

    Goldman School of Public Policy Working Paper (March 2012)

    Improving security of tenure over agricultural land has recently been the focus of a number
    of large land certification programs. While the main justification for these efforts was to increase
    productive investments and facilitate land rental transactions, we show that if access rights were
    tied to actual land use in the previous regime, these programs can also lead to increased outmi­
    gration from agrarian communities. We analyze the Mexican ejido land certification program
    which, from 1993 to 2006, awarded ownership certificates to 3.6 million farmers on about half the
    country’s agricultural land. Using the program rollout over time and space as an identification
    strategy, we show that households that obtained land certificates were 28% more likely to have a
    migrant member. The effect was larger for households with ex-ante weaker property rights and
    with larger off-farm opportunities. At the community level, certificates led to a 5% reduction in
    population, and the effects were larger in lower land quality environments. We show evidence
    of certificates leading to sorting, with larger farmers staying and land-poor farmers leaving in
    high productivity areas. We use satellite imagery to determine that, on average, cultivated land
    was not reduced because of the program, consistent with increases in agricultural labor produc­
    tivity. Furthermore, in high productivity areas, the certification program led to an increase in
    cultivated land compared to low productivity ones. We confirm the validity of the results with
    checks on exogeneity of the rollout process relative to migration trends and on attrition in the
    panel dataset we use.

  • Residential energy use and conservation: Economics and demographics

    John Quigley, Dirk Brounen, Nils Kok

    Goldman School of Public Policy Working Paper (March 2012)

    Energy consumption in the residential sector offers an important opportunity for
    conserving resources. However, much of the current debate regarding energy efficiency
    in the housing market focuses on the physical and technical determinants of energy
    consumption, neglecting the role of the economic behavior of resident households. In
    this paper, we analyze the extent to which the use of gas and electricity is determined
    by the technical specifications of the dwelling as compared to the demographic
    characteristics of the residents. Our analysis is based on a sample of more than
    300,000 Dutch homes and their occupants. The results indicate that residential gas
    consumption is determined principally by structural dwelling characteristics, such
    as the vintage, building type, and characteristics of the dwelling, while electricity
    consumption varies more directly with household composition, in particular income
    and family composition. Combining these results with projections on future economic
    and demographic trends, we find that, even absent price increases for residential
    energy, the aging of the population and their increasing wealth will roughly offset
    improvements in the energy efficiency of the building stock resulting from policy
    interventions and natural revitalization

  • Educational Consequences of the End of Court-Ordered Desegregation

    Rucker Johnson

    Goldman School of Public Policy Working Paper (March 2012)

    The present paper combines this comprehensive data on the timing of court releases from desegregation
    plans of more than 200 school districts that occurred since 1990 (obtained from Reardon et al.) with nationally-representative longitudinal micro data of children born since 1980 followed through 2009. Inparticular, I use the Panel Study of Income Dynamics and its Child Development Supplement (PSIDCDS) matched to children’s school and neighborhood characteristics and school desegregation policyvariables. Using an event study framework and difference-in-difference model, I examine the impacts of the termination of mandated desegregation plans on academic achievement outcomes, including cognitive test scores, high school graduation rates, educational attainment, and non-cognitive behavioral outcomes, separately by race. Preliminary results show that the increased allocation of school resources to those in high poverty, minority neighborhoods following the release of continued court oversight actually served to mitigate the potential negative impacts of resegregation on black student achievement (at least in the short-run).

  • Consumer-Friendly and Environmentally-Sound Electricity Rates for the Twenty-First Century

    Lee Friedman

    Goldman School of Public Policy Working Paper (March 2012)

    This paper emphasizes the importance of bringing off-peak rates down to their
    marginal costs so that the current mispricing of electricity does not act as a substantial
    deterrent to the reduction of greenhouse gases, as through vehicle electrification. It
    considers whether there are feasible, efficient and equitable time-varying electricity rate
    structures that will be attractive to large numbers of residential customers with smart
    meters. One family of rate structures called Household On and Off Peak (HOOP) plans meets
    the efficiency criterion and is promising for meeting the distributional ones. HOOP plans
    utilize marginal-cost time-based rates except for fixed infrastructure charges that vary by
    customer group and cover nonmarginal expenses. Two alternative equity principles to guide
    the assignment of the fixed infrastructure charges to different groups are considered. A
    representative sample of California residences with usage data for each 15 minute interval
    for a one year period enablessome preliminary tests ofthese HOOP designs. Simple
    statewide versions of these designs replicate reasonably closely the actual bill distribution
    that results from the independent and far more complex rate structures in use by the three
    separate utilities that service these residences, suggesting that each utility could use HOOP
    designs to meet the necessary criteria.