Template-Type: ReDIF-Paper 1.0
Title: Why Don’t Poor Families Move? A Spatial Equilibirum Analysis of Parental Decisions with Social Learning 
Author-Name: Suzane Bellue
Author-Email:
Classification-JEL: D13, D62, D83, E24, I2, J13, R2
Keywords: neighborhood, education, human capital, learning, social mobility

Abstract: In the United States, less-educated parents tend to choose lower levels of parental
inputs, they reside in bad neighborhoods and allocate little time to parent-child activities. 
I propose a spatial overlapping generation model of parental decisions about
time and neighborhood quality with imperfect information and social learning. Specifically, 
young agents learn about the relevance of parental inputs through observing
their neighbors. Crucially, however, they are prone to misinferences as they may not
be able to perfectly correct for selection induced by income segregation. I calibrate
the model using several United States representative datasets. The calibrated model
matches targeted and non-targeted parental behavior moments across socioeconomic
groups. I find a relatively modest level of parental delusion that increases inequality by
3% (income Gini index) and social immobility by 12% (intergenerational rank-rank). A
housing voucher policy improves the neighborhood quality of eligible families, raising
children’s future earnings. When scaling up the policy, long-run and general equilibrium 
responses in parental beliefs amplify the policy effects. Inequality reduces, and
intergenerational mobility improves.



Note: 
Length: 43
Creation-Date: 2023-11
Revision-Date:
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp472
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2023_472