RESEARCH

Publications

Disenfranchisement and economic inequality: downstream effects of shelby county V. Holder

with Abhay Aneja, AEA Papers & Proceedings, 2019, Vol. 109, p. 161–65.

Working Papers

No credit for time served? Incarceration and credit-driven crime cycles

with Abhay Aneja

We document that incarceration significantly reduces access to credit, and that in turn leads to substantial increases in recidivism, creating a perverse feedback loop. In the first part of the paper, we use random assignment of criminal cases across judges to document significant post-release reductions in credit outcomes, including credit scores, mortgages, autoloans, and lender assessment of income. In the second part, we use sharp discontinuities in lending based on credit scores to show that this loss of financial access feeds back into future crime. Consequently, the financial distortions that imprisonment creates undermine the crime-reduction goal of incarceration.

 

firm leverage and the employment vulnerability gaP: evidence from the U.S. Civil Rights era

with Abhay Aneja

We study financial leverage as a transmission mechanism for unemployment risk during the Civil Rights era. We show firms increased leverage following civil rights regulation, increasing black workers' exposure to unemployment fluctuations. Exposure increases because while high firm-specific leverage increases workers' risk of unemployment (putting upward pressure on wages), high aggregate firm leverage weakens workers' outside option -- other firms -- putting downward pressure on wages. Since unemployment risk increases during downturns while outside options increase during upturns, financial leverage puts countercyclical pressure on wages, amplifying unemployment fluctuations as a byproduct. Through this wage-leverage mechanism, we show firms contributed to black workers' persistent employment vulnerability.

 

The effect of political power on Labor Market inequality: Evidence from the 1965 Voting Rights Act

with Abhay Aneja

A central concern for racial and ethnic minorities living in democratic societies is having access to opportunities for economic advancement equal to their majority counterparts. In this paper, we examine whether and how democratic institutions facilitate such advancement. We explore how the political re-enfranchisement of black Americans in the U.S. South, stemming from the passage of the 1965 Voting Rights Act (VRA), contributed to improvements in relative economic status during the 1960s and 1970s. Using spatial and temporal variation arising from the federal enforcement provision of the VRA, we document that counties where voting rights were more strongly protected experienced larger reductions in the black-white wage gap between 1950 and 1980. We then show how the VRA’s effect on the relative wages of black Americans operates through two demand-side channels. First, the VRA contributed to the expansion of public employment opportunities. Second, in line with previous work on the importance of civil rights laws, the VRA contributed to and complemented the enforcement of labor market policies such as affirmative action and anti-discrimination laws.

 

The Property Tax Gap: How Property Assessments Increase Taxation Within Minority Communities

with Troup Howard

Minority residents have historically faced discrimination in housing markets. While overt discrimination by race was outlawed by the Fair Housing Act of 1968, we use novel data to document a nationwide “assessment gap” which disadvantages racial and ethnic minorities. We show that holding property tax rates fixed, black and Latinx residents face a 10-13% higher tax burden for the same bundle of public services. We show that the assessment gap arises through two channels. First, property assessments are less sensitive to neighborhood attributes than market prices. This fact, along with residential spatial sorting, drives half of the average inequality. Second, we show a racial differential in appeals behavior and outcomes; and, exploiting changes in property ownership, we then show that assessment growth rates become higher for minority residents. Finally, we propose an alternate approach for constructing assessments, and show that this reduces inequality by at least 55-70%.