Diego Daruich (USC Marshall School of Business)

An Equilibrium Analysis of the Effects of Neighborhood-based Interventions on Children

Abstract. This paper studies housing vouchers and urban redevelopment programs by incorporat-ing neighborhood effects into a general equilibrium overlapping-generations model with endogenous location choice and child development. We calibrate the model using U.S. data andshow that simulated predictions match reduced form evidence from the literature. Our analysis finds that large-scale implementations of vouchers and place-based subsidies both resultin long-run welfare gains by reducing inequality and generating skill improvements that offset higher taxation and other GE effects. Although vouchers lead to larger welfare gains onaverage, we find that place-based subsidies may be preferable in cities with constrained housing supply.