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How Cognitive Skills Influence Housing Inequality

diversityIn the legacy of residential and educational segregation, race and class take center stage. That is especially true in terms of which families hold the keys to neighborhood and school circumstances most conducive to their children's development, according to a new study from the Joint Center for Housing Studies of Harvard University.

That said, the ways that might amplify new drivers of neighborhood and school sorting are being changed by the context of urban inequality.

Meanwhile, with the burgeoning popularity of choice-based urban policies—coupled with the saturation of housing markets with digital platforms—parents who process volumes of complex data more often and deftly might have the upper hand in the evaluation of highly ranked neighborhoods and schools. Those are the findings suggested by a recently published paper in demography based on research funded in part by the Center’s Student Research Support Program.

Putting that possibility to the test, for a sample of families in Los Angeles County—a more than 4,000-square-mile area in which more than 10 million people reside—the authors turned to a unique dataset tracking more than a decade’s worth of residential histories. Upon conformation of the key roles of race and class, the cognitive skills of parents independently forecasted those families that wound up in the county’s most affluent and educated neighborhoods, their results suggest.

The authors said researchers should delve more deeply into these possibilities and test whether skill-based gaps in neighborhood conditions are specific to vast, fragmented metropolises like Los Angeles with formidable informational asymmetries or more generalizable to a wide variety of places.

It might be important for policymakers to revisit the longstanding assumption that choice-based policies, such as school and housing vouchers, will effectively tamp down inequality, should the notion that skills shape residential sorting is confirmed through research. These types of policies, in fact, might disproportionately reward parents, already amply equipped to navigate complex, information rich markets, the authors said.

Consequently, it will be incumbent upon government authorities to mitigate information gaps that put highly-skilled parents in residential and education selection process at an advantage.

The Center for American Progress (CAP) recently called on lawmakers to make homeownership and affordable rental housing more accessible to people of color.  The Center, pointing to specific historical instances of racial discrimination and segregation in the housing finance system, is prevailing on lawmakers to reverse the unabated consequences of this discrimination and create a more “equitable” housing system.

“Homeownership and high-quality affordable rental housing are critical tools for wealth building and financial well-being in the United States. With this in mind, American lawmakers long havee sought to secure land for, reduce barriers to, and expand the wealth-building capacity of property ownership and affordable rental housing,” stated a report from the Center.

“But these efforts have almost exclusively benefited white households,” the report reads.

About Author: Chuck Green

Chuck Green has contributed to the Wall Street Journal, Washington Post, Los Angeles Times, San Francisco Chronicle, Chicago Tribune and others covering various industries, including real estate, business and banking, technology, and sports
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