Is Upzoning Good for Children?

• In Event: Long-Run Effects of Health and Place-Based Policies

Abstract

Recent cost-of-living increases have renewed policy interest in deregulating city housing markets. I provide the first evidence on how this “upzoning” affects the outcomes of incumbent children, focusing on Houston’s 1998 housing reform that incentivized building single-family homes downtown. In line with economic theory, I first show that the reform caused gentrification as high-income households moved into these homes. I then study how upzoning affected four inputs into childrens’ human capital production: migration, parent income, rents, and exposure to amenities. Using microdata from the US Census and the state of Texas, I show that households were not directly displaced but that renter households moved to more distant neighborhoods to avoid paying higher rents. Migration responses mean children of incumbent renters did not live in better neighborhoods during childhood. Children of homeowners, who were insulated from cost-of-living increases, experience modest improvements in educational attainment and economic circumstances, while children of renters do not experience socioeconomic benefits and commit more crimes. These findings show how neighborhood redevelopment can spill over to incumbents, with potential distributional consequences.

Author

• Micah Baum, University of Michigan