Electricity Bidding Zones and Housing Market Reactions
Plant Closures and Property Prices (with Xiao Hu and Che-Yuan Liang)
Place-based policies that allocate resources to specific areas inadvertently also designate these areas as needing assistance, potentially leading to the development of neighborhood stigma. The common coupling of resource allocation and area designation makes it difficult to measure the stigma effect. However, the Swedish police’s listing of “vulnerable” neighborhoods, initially introduced in 2015, lacked accompanying resources, offering a unique opportunity to examine the isolated impact of place-based policies on stigma. We study the stigma associated with unfavorable area labels through an analysis of how police listings affect housing prices — a reliable measure of location value. Employing the synthetic control method, we find that the list resulted in an average price decrease of 3.6% within one year and 6.5% within six years in the designated neighborhoods. In line with ideas of racial stigma, we also find that areas with a higher proportion of minority residents prior to classification experienced more pronounced negative effects.
We combine administrative data on socioeconomic status (SES) with high-resolution data on residential locations, local pollution levels, industrial facilities, as well as land cover information to investigate whether exposure to airborne toxic metals (arsenic, lead, and mercury) is unequally distributed within the population of newborn children in Sweden. We find that the spatial distribution of SES among newborns weakly correlates with the distribution of toxic metals at the national level and in the largest cities, indicating negligible sorting in this dimension. If anything, high SES children are disproportionately more exposed, residing in urban areas with higher levels of traffic and industrial activities. This leads us to conclude that environmental injustice regarding airborne arsenic, lead, and mercury exposure is not a major concern in Sweden.