The effect of a program-based housing move on employment: HOPE VI in Atlanta.

• Author: Anil, Bulent

1. Introduction

   In 2000, there were approximately 4.9 million U.S. households living in U.S. Department of Housing and Urban Development (HUD)-subsidized housing. (1) In an effort to revitalize distressed public housing and reduce the concentration of poverty, the federal government enacted the HOPE VI program in 1992. The HOPE VI program provides grants to local housing authorities in order to close existing public housing projects and build mixed-income housing on the site. From 1993 through 2006, HUD reports funding grants totaling $6.2 billion for implementation, demolition, and planning. (2)

   HOPE VI, by design, often creates an exogenous shock to households living in public housing by requiring households to move from their current public housing unit to a housing unit at an alternative site. (3) Under the HOPE VI program, displaced families may use a housing voucher or move to a vacant public housing unit. The program creates a natural experiment for analyzing the impact of an exogenous move from a public housing unit on outcomes of those individuals who experience such a move. The focus of our research is on the effect of program-based moves ("HOPE VI moves") on employment. Knowing the effects of HOPE VI is important for determining whether to continue the program, to modify it, or to abandon it. We provide evidence on one possible effect--employment.

   To analyze the impact of program-based moves on employment, we utilize a unique microlevel data set that includes the population of Atlanta Housing Authority (AHA) clients from 1995 to 2003 matched with Georgia Department of Labor (DOL) unemployment insurance (ES202) records. The resulting data set is an administrative record that contains both housing and employment status for all individuals in the city of Atlanta who received housing assistance from AHA during the period. To these data, we add a set of variables that reflect neighborhood characteristics. We use these data to analyze the impact of a "program-based move" out of public housing caused by a HOPE VI or HOPE VI-like project on the employment of the affected AHA clients. We compare the probability of employment of those who experienced such a program-based move to those public housing tenants who did not experience a program-based move. We find that a program-based move caused a positive increase in the probability of employment as compared to other public housing residents.

   We also use these data to explore how employment status changes after a voluntary move from a public housing project and find that the increase in employment after a voluntary move is essentially the same as the increase in employment associated with a program-based move when compared to public housing residents that do not move.

   The article proceeds as follows. In the next section, we review the relevant literature on the effects of moves from public housing, which is followed by a discussion of the data and methodology. Section 4 presents the empirical results, and summary statements conclude.

2. Voluntary and Involuntary Moves and Their Impacts on Employment

   Public housing might affect the behavior of residents either directly because of the housing subsidy, through the effect of neighborhood characteristics, or through the availability of various services such as job training. Federal housing programs have a variety of documented impacts on recipient behaviors, including migration, family size and formation, labor supply, and educational attainment (see, e.g., Corcoran and Heflin 2003). (4) We focus here on those studies most relevant to our research question--what is the impact of involuntary versus voluntary moves from public housing on the probability of employment; we do not consider the large and important literature that analyzes the impact of a change in the housing subsidy formula.

   Impacts of Voluntary Relocation. Gautreaux and Moving to Opportunity

   There have been two major programs that have encouraged voluntary relocation of public housing residents: the Gautreaux Program in Chicago (which ended in 1998) and the Moving to Opportunity program (MTO), which was run in five demonstration cities beginning in 1994. Johnson, Ladd, and Ludwig (2002) provide a review of the research on the effects of the Gautreaux and MTO programs on public housing tenants and conclude that relocation of low-income residents reduces welfare dependency, increases educational attainment, and improves the health status of its residents. DeLuca and Rosenbaum (2003) study the long-run effects of the Gautreaux Program on participants and find permanent positive labor market impacts on participants. This result is consistent with the findings of Rosenbaum (1995).

   An interim evaluation report by Abt Associates and the National Bureau of Economic Research for the U.S. Department of Housing and Urban Development (HUD 2006) was done to assess MTO's effectiveness in six "domains" related to education, employment, income, risky behavior, mobility, and physical and mental health. Among the findings of the interim report that are relevant to this study are the significant amount of mobility and improved neighborhood characteristics (lower poverty, which is a design element of MTO, and higher employment rates) and an insignificant impact on employment. Rosenbaum and Harris (2001) find that MTO participants experienced an increase in labor force participation and employment relative to the control group. However, Katz, Kling, and Liebman (2001) find that after five years MTO households experienced no significant change in employment, earnings, or public assistance receipts, although they lived in safer neighborhoods that had lower poverty rates than the control group. Similarly, Ludwig, Duncan, and Pinkston (2005) find that the MTO program resulted in no change in earnings or employment, but there was a reduction in welfare participation.

   Participation in the Gautreaux and MTO programs was essentially random but was voluntary since individuals selected could choose not to participate. In addition, the MTO provides a control group. These features allow the researchers to control for the unobserved heterogeneity of living in public housing in the MTO studies; such controls were not possible in the Gatreaux studies. The Hollman consent decree for deconcentration of families in Minneapolis (following the 1995 court settlement) provides another example of voluntary and involuntary moves from public housing. Goetz (2003) provides a detailed account of the case and the resulting program where some households were involuntarily moved from their demolished public housing projects (Goetz likens this to a HOPE VI move). Other households voluntarily moved from their residences into replacement housing or moved using a special mobility certificate, similar to Gautreaux or MTO (Goetz 2003).

   Evolution to HOPE VI

   Throughout the 1980s and 1990s, a number of scholars provided a renewed focus on the causes of urban poverty and implications of concentrated poverty. For example, Wilson (1987) hypothesized that the growth in urban poverty from the 1960s was due to changes in the structure of the economy (less demand for low-skilled labor and suburbanization of jobs) and the structure of inner-city neighborhoods. Because of suburbanization and other factors, Wilson shows that the inner-city neighborhoods became increasingly desperate. Curley (2005) summarizes Wilson's argument that the inner-city neighborhoods perpetuated isolation from jobs and networks needed to improve economic conditions--and neighborhoods matter for economic well-being.

   The development of this literature at a time of demonstration projects such as Gautreaux and the MTO program provided new insights into public policies aimed at alleviating poverty and provided fuel for revisiting public housing rehabilitation. Congress adopted the Urban Revitalization Demonstration Program in 1992, known as HOPE VI, to renovate or demolish distressed public housing. The program has demolished about 6% of all public housing units, that is, approximately 86,000 units (Popkin et al. 2004). The HOPE VI program targets the physical conditions of public housing projects and the social and economic environment of public housing residents.

   Analyses of HOPE VI

   We turn now to consideration of existing studies of HOPE VI, focusing on results and methodological issues. Unlike the Gautreaux and MTO programs, few studies have dealt with the effects of HOPE VI on residents, particularly the effect on employment. The existing research finds that the conditions of the HOPE VI project neighborhood improve (Zielenbach 2003), that relocated residents perceive that they live in better neighborhoods with less crime and lower poverty rates (Kleit and Carlson 2003), that the relocated residents live in better housing (Comey 2004), that educational outcomes for relocated children are better (Popkin, Eiseman, and Cove 2004), and that mental health status improved (Popkin and Cunningham 2002). Popkin et al. (2004) survey the available research on these effects, including those that have used the HOPE VI Panel Study Baseline and HOPE VI Panel Study Follow-Up, which are extensive surveys of former residents of several HOPE VI projects conducted by the Urban Institute.

   The existing research finds no effect of a HOPE VI move out of a public housing unit on the employment of former residents. These studies include Levy and Kaye (2004), who used the Urban Institute's surveys; Goetz (2002), who conducted a survey of 195 individuals in the Minneapolis--St. Paul region; Clampet-Lundquist (2004), who conducted a survey of 41 families from a HOPE VI project in Philadelphia; and Boston (2005), who used AHA data to compare residents of four HOPE VI projects with a control group consisting of residents of four other public housing units.

   Jacob (2004) addresses education outcomes from HOPE VI projects, using agency data from the Chicago housing...