Location Sorting and Endogenous Amenities: Evidence from Amsterdam

New draft! Joint with Tomás Domínguez-Iino. Revision requested at Econometrica. Resubmitted.

This paper shows the endogeneity of amenities plays a crucial role in determining the welfare distribution of a city's residents. We quantify this mechanism by building a dynamic model of residential choice with heterogeneous households, where consumption amenities are the equilibrium outcome of a market for non-tradables. We estimate our model using Dutch microdata and leveraging variation in Amsterdam's spatial distribution of tourists as a demand shifter, finding significant heterogeneity in residents' preferences over amenities and in the supply responses of amenities to changes in demand composition. This two-way heterogeneity dictates the degree of horizontal differentiation across neighborhoods, residential sorting, and inequality. Finally, we show the distributional effects of mass tourism depend on this heterogeneity: following rent increases due to growing tourist demand for housing, younger residents---whose amenity preferences are closest to tourists---are compensated by amenities tilting in their favor, while the losses of older residents are amplified.

Supplementary Material.

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

Optimal Urban Transportation Policy: Evidence from Chicago

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

We characterize and quantify optimal urban transportation policies in the presence of congestion and environmental externalities. We formulate a framework in which a municipal government chooses among transportation equilibria through its choice of public transit policies---prices and frequencies---as well as road pricing. The government faces a budget constraint that introduces monopoly-like distortions and the potential need to cross-subsidize modes. We apply this framework to Chicago, for which we construct a new dataset that comprehensively captures transportation choices. We find that road pricing alone leads to large welfare gains by reducing externalities, but at the expense of travelers, whose surplus falls even if road pricing revenues are fully rebated. The optimal public transit price is near zero, with reduced bus and increased train frequencies. Combining transit policies with road pricing allows for higher transit frequencies and lower prices due to a slack budget constraint, increasing consumer surplus after rebates.

Supplementary Appendix

Awarded NBER Transportation Economics in the 21st Century Grant

The Welfare and Distributional Consequences of Neighborhood Change: Evidence from Chicago's Public Housing Demolitions

Draft. Joint with Eric Chyn and Bryan Stuart

This paper studies one of the largest spatially targeted redevelopment efforts in the United States to date: public housing demolitions sponsored by the HOPE VI program. Focusing on Chicago, we estimate welfare impacts using a structural model that features a rich set of equilibrium responses motivated by descriptive analysis. Our results indicate that demolitions reduced welfare for Black and Hispanic households, especially those with low-income levels. In contrast, higher-income white households benefited. Counterfactual simulations explore how housing policy can mitigate negative impacts of demolitions and suggest increased public housing site redevelopment is the most effective policy for reducing racial inequality.

Featured: BFI Insights, Chicago Booth Review


Almagro, M., and Andrés-Cerezo, D. (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.

Almagro, M., Coven, J., Gupta A., and Orane-Hutchinson, A. (2023)

Disparities in COVID-19 Risk Exposure: Evidence from Geolocation Data, Regional Sciencie and Urban Economics103933


Data-Driven Nests in Discrete Choice Models

Joint with Elena ManresaSlides.

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, Caltech

De Jure versus De Facto Discrimination: Evidence from Racial Covenants

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.

Presented at (by coauthor or myself): Toronto Urban Brownbag, Toronto IO Brownbag, UEA Fall Meeting 2022, SEA 2022, AREUEA National Meeting 2023, Russell Sage and Gates Foundations Emerging Scholars Conference 2023

Featured: Chicago Booth Review