RISK

Since the mid-19th century, municipal debt has been responsible for funding some of the most significant investments in US infrastructure, schools, and social services. But rising risks of climate-related flooding threaten the value of municipal bonds, often in cities which need investment most.

In a 2014 book, MIRIAM GREENBERG and KEVIN FOX GOTHAM consider the cyclical nature of risk exposure and crisis response.

From the text:

“In the aftermath of 9/11 and Hurricane Katrina, New York and New Orleans used disaster aid to pursue a highly uneven approach to redevelopment writ large—one dependent upon, yet much broader than, tourism and marketing. From initial reports, we saw public disaster funds in the form of Community Development Block Grants and lucrative tax abatements channeled to some of the most powerful private interests in the cities—including energy corporations, hotels, real estate developers, and financial firms.

In addition to similarity in the aftermath of the disasters, we observed similarities in the historical conditions that lead up to them. Namely, processes of uneven redevelopment seemed to be occurring on top of the uneven development that we had seen play such a large role in shaping both cities over the preceding decades, and that positioned certain communities to be far more vulnerable to disaster than others. Prior advantages or disadvantages—in access to credit, insurance, and wealth; to stable and well-paid work; and to political influence—were compounded by inequitable access to post-disaster redevelopment aid. In terms of the latter, we discovered that policies pushed through in the crisis environment played a powerful role. Following 9/11, redevelopment agencies in New York City attained sweeping waivers of federal regulations governing the use of disaster and redevelopment funds—such that they no longer had to meet “public benefit” standards, be “means-tested,” or be subject to “public oversight.” After Katrina, these deregulations were extended to the entire Gulf Coast, on the basis of no argument beyond the New York precedent. This was a major victory, and source of legitimacy, for local growth coalitions who had long sought new flexible revenues to speed market-oriented redevelopment. This, in turn, had the effect of driving wider market-oriented redevelopment citywide and, by leaving other needs unmet, dramatically augmented socio-spatial inequality.”

Link to the book.

• On natural disasters and municipal bond prices in New Orleans, Omaha, and California. Link, link, and link.
• “Rising risk levels pose a threat to the insurability of floods, and insurance without risk reduction elements could lead to moral hazard.” Swenja Surminski and Delioma Oramas-Dorta analyze 27 insurance schemes that transfer the risk of flood-related economic losses in low and middle-income countries. Link.
• “Risks are not catastrophes. They are the believed expectation of catastrophes.” From a 2006 interview with sociologist Ulrich Beck. Link.

NEW RESEARCHERS

FAFSA & College Enrollment

In her job market paper, PhD candidate in economics at the University of Oregon JENNI PUTZ studies a Louisiana law that requires high school students to submit a Free Application for Federal Student Aid (FAFSA).

From the abstract:

“Aiming to reduce inequalities between low- and high income students enrolling in college, many states have proposed legislation requiring high school students to file a FAFSA application, or opt-out, prior to graduation. Louisiana was the first to implement this policy in the 2017-2018 academic year, thus potentially impacting enrollments in Fall 2018. FAFSA submissions increased significantly in Louisiana following the policy change, suggesting there may have been some follow through into post-secondary institutions. I use a synthetic control approach to estimate causal impacts of Louisiana’s FAFSA policy on college enrollment and Pell Grant awards. I find suggestive evidence that students may have substituted away from public two-year institutions towards four-year institutions. Specifically, I find marginally significant effects on enrollment for Black students at large, public four-year universities.”

Link to the paper, link to Putz’s website.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

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• “The flight of these drivers shines a light on the longstanding labor problems endemic in the UK transport industry.” New on PW, Jörg Nowak on the petrol crisis and the UK’s trucking industry. Link.
• Jessie Handbury & Sarah Moshary look at the 2010 expansion of the National School Lunch Program, finding that “by 2016, the indirect benefit had reduced grocery costs for the median household by approximately 4.5%.” Link.
• “If workers had correct beliefs about outside options, 13% of jobs would not be viable at current wages, concentrated in the low-wage segment of the labor market.” Simon Jäger, Christopher Roth, Nina Roussille, and Benjamin Schoefer on workers’ beliefs about rents and outside options. Link.
• Ayhan Kose, Franziska Ohnsorge, and Naotaka Sugawara on the rise of global government debt and personal debt during Covid-19. Link.
• “China’s vision of global economic governance is not external to the liberal international order but emerged from China’s particular position within it.” By Jake Werner. Link.
• Michael Dinerstein and Troy D. Smith estimate the effects of value-added taxes on trade flows in EU member states. Link.
• Total’s responses to global warming and campaigns for climate change denial, from 1971 to 2021, by Christophe Bonneuil, Pierre-Louis Choquet, and Benjamin Franta. Link.
• “In the absence of a centralized and detailed federal tracking system, the monitoring of relief funds flowing to the nation’s more than 13,000 school districts has largely been left to states.” At ProPublica, Annie Waldman and Bianca Fortis report on federal pandemic support for schools. Link.
• Jonathan Pattenden and Gaurav Bansal compare the 2020 farmers’ protests in India with the new farmers movement of the 1980s and 90s and examine a shift in class alliances. Link.
• “It has often been claimed that the structure of export trade between Africa and Europe during the colonial period depended on the colonizer’s identity, with the British relying on free trade and the French, in contrast, employing monopsonistic policies. However, due to the lack of systematic data on colonial trade, this claim has remained untested. This study uses recently available data on export prices from African colonies to estimate monopsonistic profit margins for British and French trading companies. The results challenge the view of the British colonizers as champions of free trade. The level of profit margins was determined much more by the local conditions in Africa (history of trade and the presence of European producers) than by the identity of the colonial power. ” By Federico Tadei. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org