RESEARCH

WORKING PAPERS

LOCATION SORTING AND ENDOGENOUS AMENITIES: EVIDENCE FROM AMSTERDAM

Job Market Paper. Joint with Tomás Domínguez-Iino.

Awarded Best Student Paper Prize 2019 by the Urban Economics Association and Best Job Market Paper Prize 2019 by the European Economic Association.

This paper argues that the endogeneity of amenities plays a crucial role in the welfare distribution of a city's residents by reinforcing location sorting. We quantify this channel by leveraging spatial variation in tourism flows and the entry of home-sharing platforms, such as Airbnb, as shifters of location characteristics to estimate a dynamic model of residential choice. In our model, consumption amenities in each location are the equilibrium outcome of a market for services, which are supplied by firms and demanded by heterogeneous households. We estimate the model using detailed Dutch microdata, which allows us to track the universe of Amsterdam's residents over time and the evolution of a rich set of neighborhood amenities. Our results indicate significant heterogeneity across households in their valuation of different amenities, as well as in the response of amenities to demographic composition. We show that allowing for this endogenous response increases inequality between demographic groups whose preferences are closely aligned, but decreases it if substantially misaligned, suggesting heterogeneity in the two-way mapping between households and amenities plays a crucial distributive role. Finally, we highlight the distributional implications of our estimates by evaluating currently debated policies, such as zoning, as well as price and quantity regulations in housing markets.

​Presented at (by coauthor or myself): 2019 Econometric Society European Winter Meeting (Erasmus University), 8th Economic Advances (Universidad Torcuato Di Tella), 14th Economics Graduate Student Conference (Washington University in St. Louis), 14th Meeting of the Urban Economics Association (FRB of Philadelphia), 2019 Urban Economics Summer School (LSE), 2019 Young Economist Symposium (Columbia University), and NYU internal seminars (Applied Micro Lunch, Stern IO Workshop, Econometrics Lunch).

PUBLICATIONS

Almagro, Milena and Andrés-Cerezo, David (2020)

The Construction of National Identities, Theoretical Economics, 15 (2), 763-810

Supplementary Appendix.

Almagro, Milena and Orane-Hutchinson, Angelo (2020)

Supplementary Appendix.

Featured: Marginal Revolution. Covid Economics: Vetted and Real-Time Papers, Issue 13. VoxTalks, Episode 28.

SELECTED WORK IN PROGRESS

THE EFFECTS OF URBAN RENEWAL PROGRAMS ON GENTRIFICATION AND INEQUALITY: EVIDENCE FROM CHICAGO PUBLIC HOUSING DEMOLITIONS

Joint with Eric Chyn and Bryan Stuart.

This paper provides new evidence on the impacts of urban renewal programs on neighborhoods. We exploit quasi-experimental variation in

public housing demolitions in Chicago to study effects on housing values and residential sorting. Our reduced-form analysis shows that

demolitions led to sustained increases in housing values and reductions in the share of residents that are Black, in poverty, or without a college degree. We estimate a structural model of neighborhood choice to distinguish between the mechanisms through which public housing

demolitions affected neighborhoods. The model estimates suggest that neighborhood change was the result of both preferences for racial segregation and the direct disamenity associated with public housing. In future work, we will use the estimated structural model to study housing policy counterfactuals and welfare.

Presented at (by coauthor or myself): European UEA 2021, U Wisconsin-Madison, Notre Dame, OIGI Fall 2021, American UEA 2021, Atlanta Fed, Rochester.

DATA-DRIVEN NESTS IN DISCRETE CHOICE MODELS

Joint with Elena Manresa. Slides.

Nested logit models represent consumers as agents that choose sequentially over product groups before choosing a final product, hence allowing for flexible substitution patterns across products. However, assuming knowledge of the nest structure has proven problematic in some applications. We propose a method that estimates both the nest structure as well as the structural parameters using product share data. We consider two different settings with price endogeneity: (1) longitudinal observations of products across a large number of markets, where conditional on a product fixed effect prices are exogenous and (2) single-market observations with a cost-shifter. In each setting, we develop estimators to recover the structure of the nest and the parameters and analyze its statistical properties. We propose two-step estimation strategies where in the first step we classify products and in the second step, we recover structural parameters. More specifically, in (1) we use the Bonhome and Manresa (2015) estimator to recover groups, and in the second step, we estimate the model conditional on the estimated nest structure. In (2) we make use of a control function approach to classify products using k-means clustering. We showcase the good performance of our method through a Monte Carlo experiment, and we apply it to the U.S. automobile market data first used in Berry, Levinsohn, and Pakes (1995).

Presented at (by coauthor or myself): NYU, Cornell, Minnesota, UCL.

PUBLIC TRANSIT POTENTIAL

Joint with Felipe Barbieri, Juan Camilo Castillo, Nathaniel Hickok, and Tobias Salz.

Building on the literature of two-sided market pricing, we show how a budget-constrained government would set optimal public transit prices and capacities across modes, accounting for externalities and returns to scale. We then explore how far current prices for different modes are from the social optimum. To that end, we assemble a dataset of all trips in Chicago where large economic disparities make public transit essential for many citizens. We also explore the effect of on-demand public transit, which exhibits large network effects.

Awarded NBER Transportation Economics in the 21st Century Grant

DISCRIMINATION IN HOUSING MARKETS: EVIDENCE FROM HISTORICAL RACIAL COVENANTS IN MINNEAPOLIS

Joint with Aradhya Sood.

Racially-restrictive covenants, which prevented the sale and rental of housing to several racial and ethnic minorities, were a common phenomenon in the first half of the 20th century in many northern cities in the U.S. In this paper, we study how these racially-restrictive covenants affected the socio-economic and geographic structure of urban areas and how their effects have persisted over time. In the first part of the paper, we leverage plausible exogenous variation in the changes of water bodies and soil quality to predict the presence of covenants. We find that racial covenants are negatively correlated with natural amenities, suggesting that they were used as substitutes of location characteristics that were potentially highly valued by city residents. In the second part of the paper, we will employ a location choice model to disentangle the various channels through which racial covenants shaped the geography of northern cities and measure the welfare of counterfactual housing policies.

Awarded Russell Sage Foundation and Gates Foundation Pipeline Grant for Emerging Scholars.