Public housing preferences and welfare in New York City 1930-2010

Maximilian Guennewig-Moenert

No 107, Working Paper Series in Economics from University of Cologne, Department of Economics

Abstract: This paper estimates the long-run effects of public housing on neighborhood composition and welfare in New York City from 1930 to 2010. At its inception in the 1930s, public housing was designed to revitalize slums and provide housing for working-class families. These projects received substantial public support and were desired by both White and Black households. Using a difference-in-differences strategy, I show that projects built before 1960 led White populations declining by up to 46% over 60 years while Black populations surged by 318%. Nearby areas saw a 17% decline in Whites and a 17% increase in Blacks. Post-1960 projects had minimal effects. Linking reduced-form results to a location choice model, I recover household preferences and show that high-rise developments with wide open space in between are less desirable, while low-rise, compact projects increase demand. Welfare estimates show diverging trends by race. I find that welfare gains for White population turned negative from $109.68 in 1950 to -$372.8 in 2010, gains for Black households remained at $1281 per year. These findings highlight how public housing evolved from a broadly supported urban renewal tool to a policy with racially divergent welfare effects and lasting implications for neighborhood sorting.

Date: 2025-03-31
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