Demolition, Displacement, and the Effect on Children in Chicago Public Housing

Housing is the foundation of a family’s life. This basic need determines the surrounding environment, the schools children attend, access to amenities, and even economic opportunities. Due to the essential service that housing provides, the US federal government spends about $50 billion annually on housing assistance for low-income families. However, public housing has not always delivered on its promises.

In Chicago, this failure led to the demolition of a number of public housing developments during the mid-1990s and a policy shift to a voucher-based system. If a government housing unit was scheduled for demolition, residents could transfer to another unit or relocate using a Section 8 voucher to rent in the private market.

New research by economist Eric Chyn provides evidence that the children of families who left public housing are more likely to be employed as adults and earn more than those not displaced. Using labor market data linked to administrative records, Chyn concludes that displaced children of all ages grow up to have relatively improved economic outcomes. On average, children of displaced families are nine percent more likely to participate in the labor force and have average annual earnings that are $602 higher—a 16 percent increase—relative to their non-displaced counterparts.

This study’s findings contrast the Moving to Opportunity (MTO) results, which suggest that only young children (under 12 years old) benefit from moving out of high-poverty public housing. In that study, residents had the option to apply for a voucher, which some critics suggested might create selection bias.

Constructing a natural experiment, Chyn leverages Chicago’s public housing demolitions to compare children of families who relocated to those who remained. The two groups statistically have the same observed characteristics in terms of labor market and criminal activity prior to the demolitions. The data demonstrates that three years after demolition, displaced families lived in neighborhoods with 25 percent lower poverty and 23 percent less violent crime relative to non-displaced public housing residents.

Increased neighborhood choice is important, as public housing developments are located in the most impoverished zip codes of Chicago. For example, the Census Bureau classifies extreme poverty where more than 40 percent of households live below the poverty line; in this sample the poverty rate was over 77 percent. With 20 million children across America living in high-poverty neighborhoods, there is an escalating concern over the consequences of concentrated poverty.

After examining outcomes of those who moved, Chyn discovers that economic gains are only realized for children in households with no working adults, with no detectable effects for children in households with at least one employed person. Also, using data collected from social administrative records, Chyn determines that the significant economic gains from moving are not sufficient to reduce eligibility for Medicaid or food stamps.

There are also worrisome downsides to the demolition and displacement. Children of displaced families had 16 percent more property crime arrests than their non-displaced peers. Furthermore, for older children, there is a nine percent increase in the probability of dropping out of high school. This last fact echoes the aforementioned MTO research and the detrimental impact of moving as a teenager on future outcomes.

Chyn’s analysis reveals the relocation of children out of high-poverty public housing results in more expansive improvements than past evidence suggested. In contrast to Professor Raj Chetty’s MTO findings, children of all ages who moved had improved economic outcomes relative to residents who remained in public housing. One possible explanation is the “reverse Roy” effect, where those who would most benefit from a program are the least likely to receive assistance. Demolitions forced families to move who would have otherwise preferred to stay.

Housing vouchers offer a potential opportunity to disrupt poverty. Chyn calculates that a child who moves out of public housing due to demolition earns about $45,000 more in total lifetime income. This corresponds with an increase in tax revenue enough to exceed the average cost of relocating public housing residents. Not only could children benefit in the long run from relocating, but taxpayers could net gains. Investing in mobility, opportunity, and fiscal responsibility might be a model for future success.

Article Source: Chyn, Eric. “Moved to Opportunity: The Long-Run Effect of Public Housing Demolition on Labor Market Outcomes of Children.” 2016.

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