Theories are ambiguous about whether households of higher or lower wealth consistently trade against expected returns. I employ unique matched data on US household trades in the housing market and their wealth to study trade timings and quantify the impact on portfolio returns and wealth inequality. I find that poorer households consistently buy houses when expected returns are low (e.g., after price increases) and sell when expected returns are high (e.g., after price declines). The estimated dispersion in expected portfolio returns from active trades is large, with an interquartile range across the wealth distribution of 65 basis points per year.

An earlier version circulated under the title “Cyclical Transactions and Wealth Inequality.” 

We examine whether limited access or lower demand explains why low-income and Black households use bank branches less than high-income and White households, despite relying on branch services more. We obtain measures of access and demand from a gravity model of consumer trips to bank branches, estimated using mobile device geolocation data. We find that lower demand, not lower access, explains reduced branch visits in low-income communities. In contrast, poorer access fully accounts for reduced branch visits in Black communities, where demand for branch services is no different than in White communities nationally and surpasses it in large cities. 

An earlier version circulated under the title “Bank Branch Access: Evidence from Geolocation Data.” 

A capital influx into local housing markets would be expected to increase house prices, but the spillover effect onto rental prices is theoretically ambiguous. I estimate both price impacts in U.S. residential housing markets using data from a boom in real estate purchases by buyers from China, which amounted to $200 billion of purchases made between 2010 and 2019. Using a novel method to measure these purchases and an instrumental variable for where purchases are made, I find a large positive house price impact. Consistent with investment q-theory, rents fall as constructions rise, especially in areas with elastic housing supply.

We provide observational evidence that climate risks impacted economic behavior earlier and more significantly than conventional discourse and research suggests. Using a novel dataset with residential property-level measures of climate risk exposures, we document a significant association between climate risks and house prices and ownership patterns as early as 2006. Within a census tract, and using a repeat-sales design with controls for time-varying fundamental demand, one percent of extra expected future climate losses is associated to a 2-4% permanent price discount to a house, far larger than the frictionless rational expectations benchmark. Mimicking the timing of this price pattern, the buyers of climate-riskier properties shifted from owner-occupants to landlords/investors, and from high-leverage borrowers to low-leverage borrowers, suggesting a potential role for risk-sharing or financial constraints.

We argue that a long-term low interest rate environment can cause labor income inequality, the emergence of the working rich, and reduced intergenerational mobility. We provide a simple model with endogenous human capital accumulation and credit constraints to demonstrate this causal link. The mechanism operates through a tilting of the human capital gradient: wealthy households, more so than poor households, will increase human capital investment in response to low rates. Normatively, these tilting responses to low rates are inefficient, but higher capital taxes is not an ideal response. We find empirical support for our tilting mechanism over the last 60 years in the US. Quantitatively, we show that the endogenous human capital investment response to low interest rates can account for a 17% rise in cross-sectional labor income variance (higher inequality) and a 7% higher parent-child labor income inter-generational elasticity (lower mobility).

We estimate intergenerational elasticities (IGE) of housing consumption and income in the US. Using surnames to link 1940 and 2015, we estimate a one-generation housing-consumption IGE of 0.73, higher than that of income at 0.52. Housing consumption IGE is higher for White compared to Black Americans and higher in the Northeast, patterns that contrast with income IGE. Inverting Engel curves suggests a total-consumption IGE of 0.72. Complementary to income IGE, consumption mobility is a closer measure of welfare mobility, and comparisons with income IGE inform intergenerational consumption insurance.

We study the effect of racial minority bank ownership on minority credit access. Using new data for 87 million minority borrowers, we present four main findings. First, minority-owned banks specialize in same-race mortgage lending. Over 70 percent of their mortgages go to borrowers of bank owners' same race. Second, the effect of minority bank ownership on minority credit is large and exceeds that of minority loan officers. We find that minority borrowers applying for mortgages in banks whose owners are of the same minority group are nine percentage points more likely to be approved than minority borrowers in non-minority banks. This effect is over six times that of a minority loan officer. Third, the default rate of minority banks' same-race borrowers is much lower than that of otherwise-identical borrowers of other races, and Asian banks drive this difference. Fourth, evidence from plausibly exogenous bank collapses suggests that the effect of Asian bank ownership might reflect an expansion rather than a reallocation of credit to Asian borrowers. Our findings are consistent with minority bank ownership reducing information frictions and improving credit allocations.