https://macropaperwarehouse.com/authors/eric-chyn/Eric ChynHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/an-equilibrium-analysis-of-the-effects-of-neighborhood-based-interventions-on-children/https://macropaperwarehouse.com/papers/an-equilibrium-analysis-of-the-effects-of-neighborhood-based-interventions-on-children/<p><strong>Research question.</strong> How should governments design neighborhood-based policies to improve long-run outcomes for children, once one accounts for general equilibrium (GE) forces—endogenous rents, neighborhood quality, wages, and distortionary taxation—that small-scale experimental studies cannot identify?</p> <p><strong>Model.</strong> The paper embeds neighborhood effects into a quantitative, heterogeneous-agent overlapping-generations (OLG) model with endogenous location choice and child skill development. The economy has three building blocks: (1) a dynastic life-cycle structure in which parents choose a neighborhood (from two options: a disadvantaged n=1 and an advantaged n=2) and allocate time to child development, with child skills produced by a nested CES aggregator combining parental time and neighborhood quality (proxied by per-capita income in the tract); (2) a GE Aiyagari incomplete-markets framework with endogenous labor supply, wage uncertainty, and progressive labor taxation; and (3) a government that finances housing vouchers or place-based wage subsidies by adjusting the labor income tax parameter, with all additional net expenses fully offset by tax revenue. Housing supply is upward-sloping (elasticity 1.75, from Saiz 2010), so rents are endogenous.</p>