CAREER: Empirical Studies of Cities' and Neighborhoods' Influence on Income and Consumption Inequality

The geographic location of one's place of residence and place of work plays a strong role in economic well-being and inequality. While households are free to migrate away from declining areas, towards prospering ones, many reasons mitigate mobility, leaving residents exposed to local economic conditions. This CAREER agenda proposes a line of projects to examine the causes and consequences of limited mobility, how it varies across the income levels, and ultimately contributes to well-being or inequality. The first line of research will focus on the consumption patterns across US cities and income levels. The second line will investigate the benefits of living nearby one's family members. The third line of work will look at the consequences of financial instability and housing foreclosure on homeowners, renters, and landlords.

To investigate the geography of consumption inequality, the investigator will use a new dataset of linked bank account and credit card micro data covering 5 percent of the US. This analysis will shed light on whether consumption bundles vary mostly based on one's income or whether one's place of residence influences one's consumption bundle. The second line of work will shed light on why low skill workers appear less willing to migrate between cities. A likely mechanism contributing to limited migration is low skill workers' desire to live near their families. While geographic proximity to one's family may be beneficial in many ways, the research will investigate its labor market value using administrative data. The third line of work will analyze the costs and consequences of losing access to one's home and neighborhood through foreclosure. The project will separately study impacts on homeowner occupants, renters, and landlords to decompose the financial versus eviction effects of foreclosure. Heterogeneity in the impacts of foreclosure across high and low-income neighborhoods will provide additional evidence on whether foreclosure is a regressive or progressive policy.