Diane Hite

Place-based policies refer to government efforts to enhance the economic performance of an area within its jurisdiction. Applying various difference in differences strategies, this study evaluates the neighborhood effects of a place-based policy—the Economic Development Priority Areas (EDPA) of Atlanta, Georgia, USA. Since the census block groups are locally defined and the boundaries may change over time, we defined the neighborhoods by creating a set of 0.25-mile- diameter circles evenly distributed across Atlanta, and used the created buffers as the comparison unit. The empirical estimates showed that EDPA designation significantly reduced poverty rate and increased housing price of EDPA neighborhoods but had no beneficial effects on population size and employment rate. The heterogeneous analysis with respect to different initial economic status of the neighborhoods showed a relative larger and significant effect of EDPA designation on low-income neighborhoods. The increasing labor demand induced by EDPA designation in low-income neighborhoods attracted more population to migrate in and put upward pressure on housing prices. The estimation results are robust when replacing the 0.25-mile-diameter circle neighborhoods with 0.5-mile-diameter circle neighborhoods. Although we found some positive effects of the EDPA program in Atlanta, it would be misguided to assume similar effects occur in other areas implementing place-based policies.

Both sorting on public goods and tastes for segregation contribute to the persistence of segregation in America. Incorporating Schelling’s (1969, 1971) concept of “neighborhood tipping” into a two-stage equilibrium sorting model, in which both neighborhood demographic composition and public goods (e.g., environmental quality) affect households’ residential location choice, this study investigates how preferences for neighborhood demographic composition could obscure the role of exogenous public goods on segregation. The results reveal that non-white households face higher level of exposure to air pollution, suggesting the presence of environmental injustice in Franklin County, OH. Using a counterfactual scenario of switching off heterogeneous taste for environmental quality, this study identifies that sorting on Toxic Release Inventory (TRI) emissions drives little correlations between emissions and demographics. However, when taste parameters of the interactions between neighborhood demographic composition and household race are eliminated, segregation (as measured by over-exposure to households of the same race) of black and white households decreases by 7.63% and 16.36%, respectively, and own-race neighbor preferences contribute to segregation differently according to household income. These results may help explain some recent puzzles in the relationship between environmental quality and demographics.