JoonYup Park

We introduce the concept of racial capital, defined as the collective material and non-material assets of the racial groups to which a child is exposed while growing up, and examine its potential to explain racial disparities in life outcomes that persist even after accounting for a broad range of parental and neighborhood resources. Estimates for Asian, Black, Hispanic, and White children born around 1980 imply that metro-level racial capital measures: (i) have substantial power to explain racial differences in life outcomes, (ii) sharply close and, in many cases, reverse the sign of racial intergenerational mobility gaps in education, income, and employment, and (iii) matter most when racial dissociation, as measured by residential and marriage segregation, is greatest. In contrast to standard estimates, our empirical framework implies a steady state equilibrium that is characterized by near equality for Black and White Americans. The inclusion of racial capital in the model, however, greatly slows the speed of convergence to the steady state, helping to explain the historically slow speed of racial economic convergence in the United States over the past two centuries. Finally, our framework highlights the complementary way that policies related to racial dissociation and wealth transfers affect the speed of convergence across generations.

This paper studies the impact of Small Area Fair Market Rents (SAFMR), a major reform to the voucher program that adjusts rent ceilings to a finer ZIP-code level variation, on voucher households' neighborhood and economic outcomes, and their interaction with the fiscal and non-fiscal components of program operation. Using a difference-in-differences design, I find that SAFMR improved voucher holders' relocation to higher-rent, lower-poverty neighborhoods. These effects were especially pronounced in metropolitan areas with high levels of residential segregation. Consistent with the neighborhood effects literature, relocation to high-opportunity neighborhoods increased household income and rent contributions, leading to declines in federal spending per voucher. However, the reform did not expand program reach. Long-run evidence from the first SAFMR adopter shows that federal per-unit costs eventually rose as the number of subsidized households in high-rent areas outweighed the income-driven savings, resulting in a contraction in the number of households served. These findings highlight a key trade-off: while SAFMR generates fiscal efficiencies in the short run, its long-term financial sustainability remains uncertain under a fixed program budget.

This paper examines the effects of improving low-income households' access to high-rent, high-opportunity neighborhoods on the residential equilibrium. Amidst pervasive residential segregation, I study the Small Area Fair Market Rents, a re-design of the rental voucher program that increased subsidies in high-rent neighborhoods and allowed voucher families to relocate there. I find that it led to a more polarized rental market: rents rose in high-rent areas but declined in low-rent areas. In contrast, it fostered a more egalitarian equilibrium in terms of income and racial composition. While high-income non-voucher households experienced a modicum of welfare loss due to increased living costs, low-income counterparts benefited from reduced rents in low-rent neighborhoods. However, I find that the institution of the voucher program itself led to a substantial welfare loss for low-income households, the very population this program aims to assist. This research illustrates the broader implications of housing vouchers, underscoring the need to balance affordable housing, societal integration, and overall welfare.

In the U.S., Black and white households with identical incomes live in neighborhoods characterized by vastly different economic resources. This racial neighborhood inequality is present in every major metropolitan area and at all points of the income distribution. We document these patterns using neighborhood income as a summary measure of economic resources and highlight where this form of racial inequality is especially severe. We then examine a series of potential explanatory mechanisms for neighborhood inequality, including decentralized racial sorting, housing discrimination, and racial differences in wealth and home ownership. We conclude with a discussion of how the separate and unequal geography of the American housing market contributes to intergenerational mobility and the speed of racial economic convergence in the United States.