CAREER: A Quantitative Analysis of Spatial Inequality and Place-based Policies

This proposal sheds light on some of the causes, consequences and policy implications of geographic inequality. The first project formalizes the theoretical argument in favor of a redistribution system based on place of residence, in addition to income. The project then assesses the gains of such place-based redistribution in the United States. The second project studies within-city geographic inequality and the impact of corresponding neighborhood-level place-based policies. In particular, it analyzes jointly three trends of the past few decades in the United States: increased income inequality, high incomes moving to the downtowns of large cities, and neighborhood change in these cities. The third project develops and characterizes a new theoretical model that incorporates preferences for location that depend on income, and examines the impact of population growth on changes in location choice by skill, and on geographic inequality.

The field of Economic Geography has witnessed a quantitative revolution in the recent years due to the frameworks that combine theoretical tractability, close connection to data, and the ability to undertake quantitative model-based general equilibrium counterfactuals that are useful for policy assessment. These tools have been primarily focused so far on studying efficiency in models with homogeneous agents. This proposal extends the framework and its applications to analyze spatial equilibria with heterogeneous agents, where households are unequal in skill and income, leading to different location choices. These theoretical extensions are a necessary starting point for the analysis to focus on spatial inequality and the distributional consequences of spatial policies, in addition to their impact on efficiency.