Dodging the burden of proof: A reply to Manville, Lens and Mönkkönen

Abstract

Manville, Lens, Mönkkönen’s reply to our ‘Housing, urban growth and inequalities’ Urban Studies article is welcome. However, it fails to engage with our two main criticisms of the housing-as-opportunity literature: that (a) deregulation and upzoning in large and dynamic cities are unlikely to benefit those at the bottom of the income pyramid facing the greatest affordability problems; and that (b) greater deregulation will not facilitate interregional migration from low opportunity regions to booming cities, thus having no discernible impact on within-city and cross-regional inequality. We also argue that because they publicly endorse legislation making bold claims in this respect, the burden of proof lies on them and others who propose sweeping policy experiments with our cities.

Housing Constraints and Spatial Misallocation

“…where P i denotes the local housing price, β the expenditure share on housing, and Z i the value of local amenities. 7 Two features are worth highlighting. First, workers have homogeneous tastes over locations.…”

“…The equilibrium of the model is defined by the equations for local employment (2), housing prices (4), the nominal wage (5), aggregate output (7), and aggregate utility (9). The "exogenous" variables are local TFP, local amenities, and the local elasticity of residential housing supply in all US cities.…”

“…When θ = ∞ , then we are in the perfect mobility world. The elasticity of the local wage to housing prices or amenities is then 1 and aggregate output given by (7).…”

“…Wages.-The amount of spatial misallocation depends on geographical differences in wages. In particular, remember from equations (7) and 8that misallocation depends on the dispersion across cities in local prices, which in equilibrium is simply the dispersion in the nominal wage. presents the unconditional average wage, and panel B presents the residual average wage after controlling for differences in worker characteristics across cities.…”

Elite Colleges and Upward Mobility to Top Jobs and Top Incomes

“…One mechanism that may be important is peer relationships. Descriptive accounts of business programs often discuss the importance of peer ties, in particular peer ties formed between students from similar backgrounds, as drivers of success (Mills 1956), 4 and institutions themselves highlight peer networking opportunities in promotional materials (University of Chicago Booth 2014, Harvard Business School 2013).…”