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  3. 2021
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Public Policy

Paper Session

Monday, Jan. 4, 2021 3:45 PM - 5:45 PM (EST)

Hosted By: American Real Estate and Urban Economics Association
  • Chair: Daniel Hartley, Federal Reserve Bank of Chicago

Rubber Stamping Opportunity Zones

Jefferson Duarte
,
Rice University
Tarik Umar
,
Rice University
Emmanuel Yimfor
,
Rice University

Abstract

Central planners likely cannot allocate resources effectively when communication between different levels of government is impaired or there are political pressures. We test these predictions using the opportunity zone (OZ) program, which allows governors to allocate investment incentives to certain census tracts. Within a city, governors allocate OZ designations largely according to mayors' nominations. However, only nominations providing comparative statements (e.g., rankings) predict the investment effect. Surprisingly, when allocating OZs across cities, governors ignore the quality of communication and publicly-available predictors of future investment (e.g., high past investment). Greater political pressures lead governors to rubber stamp the non-informative nominations more.

Do Minimum Wage Increases Benefit Low-Income Households? Evidence from the Performance of Residential Leases

Moussa Diop
,
University of Southern California
Sumit Agarwal
,
National University of Singapore
Brent Ambrose
,
Pennsylvania State University

Abstract

We extend the debate on the benefits to increasing the minimum wage by examining the impact on expenses associated with shelter, a previously unexplored area. Our analysis uses a unique data set that tracks household rental payments. Increases in state minimum wages significantly reduce the incidence of renters defaulting on their lease contracts by 1.7 percentage points over three months, relative to similar renters who did not experience an increase in the minimum wage. This represents 32% fewer defaults. However, this effect slowly decreases over time as landlords react to wage increases by increasing rents.

Taxing Uber

David Agrawal
,
University of Kentucky
Weihua Zhao
,
University of Louisville

Abstract

Transportation network companies (TNCs) such as Uber and Lyft create new challenges for local governments that finance public transit, but they also create new opportunities for cities to generate tax revenue. To shed light on the effect of taxing Uber, we adapt the monocentric city model to include multiple endogenously chosen transportation modes, including ride-hailing applications. We show that most tax and spending programs that cities have currently adopted only mildly increase transit usage. However, our model predicts significant increases in public transit ridership when TNCs are subsidized as a "last-mile" service. If designed correctly, these targeted subsidies more than half as effective at increasing road speed as the optimal congestion toll. Our model indicates that Uber and public transit are currently substitutes, but with sufficiently targeted subsidy policies, Uber and public transit can become complementary services. If cities seek to increase transit ridership, taxes on TNCs-even if earmarked for transit improvements-are not the optimal policy.

School Food Policy Affects Everyone: Retail Responses to the National School Lunch Program

Jessie Handbury
,
University of Pennsylvania
Sarah Moshary
,
University of Chicago

Abstract

We study the effect of school lunch provision on local business under the 2010 Healthy, Hunger-Free Kids Act. The act introduced a Community Eligibility Provision (CEP), which requires that participating schools offer lunch free of charge to all students. Schools may adopt the CEP if at least 40% of students participate in other means-tested welfare programs. We exploit the discontinuity in CEP eligibility for estimation, and find that state adoption of CEP leads to a 13.9% decline in grocery sales. Results suggest that the impact of the CEP demand shock propogates spatially: chains that are highly exposed to the CEP lower prices on the order of 5% across all outlets. Further, retail chains are less likely to open new outlets in areas that adopt the CEP. Using a stylized model of grocery demand, we estimate the welfare that this price reduction delivers as an indirect benefit to all households in affected markets.
Discussant(s)
Jesse Gregory
,
University of Wisconsin-Madison
Brian Phelan
,
DePaul University
David Albouy
,
University of Illinois
Justin Gallagher
,
Montana State University
JEL Classifications
  • R0 - General