The Effects of Small Area Fair Market Rents on the Neighborhood Choices of Families with Children

This paper reports and extends the quantitative findings of the Small Area Fair Market Rent Demonstration Evaluation, focusing on the important subgroup of families with children. We test whether varying housing assistance subsidy caps with ZIP Code rent levels (that is, introducing Small Area Fair Market Rents or SAFMRs) increases the likelihood that voucher-holder families with children locate in higher opportunity neighborhoods, as proxied by poverty rates, the proficiency levels of local elementary schools, jobs proximity, and environmental hazards. Because of our focus on families with children, we pay particular attention to school proficiency levels and poverty rates. We estimate a difference-in-differences specification on a repeated cross-section of administrative data to estimate the effect of the introduction of SAFMRs in seven public housing agencies as compared to a large group of agencies that continued to operate under metro area FMRs. Five years after implementation, Small Area FMRs do not appear to affect overall move rates, but they meaningfully affect the locational outcomes among families with children who move. The share of such families settling in neighborhoods in the top quartile of our opportunity index measure increases by 11 percentage points (a 120-percent increase).