Historical Redlining and Contemporary Federal Place-Based Policy: A Case of Compensatory or Compounding Neighborhood Inequality?

Abstract

In the 1930s, the federal Home Owners' Loan Corporation (HOLC) created maps of American cities that were used to restrict investment in minority neighborhoods, leaving a durable mark on redlined neighborhoods. Since the 1990s, place-based policies are one tool the federal government has used to reinvest in disadvantaged neighborhoods. Do these programs target historically redlined neighborhoods—and to what effect? In this article, we combine data on federal place-based initiatives from 1990 to 2015 and historical HOLC maps to answer these questions. Results indicate that formerly redlined areas received substantially more funding than areas graded more favorably, indicating concentrated investment in neighborhoods that had experienced disinvestment. Federal place-based funding was associated with increased property values in formerly redlined areas, but also reductions in the share of Black homeowners, suggesting racial disparities in who benefits from rising property values. We conclude by discussing the potential and the challenges of place-based policy to address urban inequality.

Keywords:

• Redlining
• concentrated disadvantage
• public policy
• homeownership
• racial inequality

Acknowledgments

This research was funded by the Bill & Melinda Gates Foundation and the Center for the Study of Inequality at Cornell University. We thank Kathryn Edin, Ajay Chaudry, Alexandra Cooperstock, Sam Dodini, Craig Pollak, Eva Rosen, and Benjamin Segal for their contributions to the place-based data used in this project. We are grateful to the staff at the Johns Hopkins 21st Century Cities Initiative for their administrative support of this project. Previous versions of this article were presented at the annual meetings of the American Sociological Association and the Association for Public Policy Analysis and Management.

Disclosure Statement

No potential conflict of interest was reported by the authors.

Notes

1 We also tested the robustness of our results by using a geographically weighted scale that incorporates the weighted percentage of the tract assigned to each HOLC grade. In this weighted scale, A is given a weight of 1 and D is given a weight of 4, and weights are multiplied by the percentage overlap for each census tract. To continue the example in the main text, this tract would be calculated as (1 × 0.30) + (4 × 0.70) for a total of 3.1 out of 4 on the weighted scale. Thus, higher weighted scale grades correspond with less desirable HOLC ratings. The results presented are robust to using this continuous measure rather than the ordinal grade measure.

2 Although all methods of spatial interpolation involve some amount of error (Logan et al., 2016, 2021), our findings hold for tracts that did and did not change boundaries from 2000 to 2010.

3 The results are robust to including these tracts with a small share of Black residents.

4 Several predictors are right-skewed and were logged for regression analyses: population size, median household income, and distance to the central business district. We also mean-centered all continuous variables.

5 The connection between historical redlining and contemporary place-based investment varies considerably across cities, as depicted in Appendix Table A1.

6 https://opportunityzones.hud.gov/

Additional information

Notes on contributors

Cassandra Robertson

Cassandra Robertson is a researcher and policy analyst focused on social policy and economic mobility. She was a postdoctoral fellow at the Cornell Population Center, and holds a PhD in sociology from Harvard University. She previously served as a fellow in the Office of Senator Cory Booker and as a fellow with the Office of the Assistant Secretary of Planning and Evaluation at the Department of Health and Human Services.

Emily Parker

Emily Parker is a postdoctoral fellow with the Population Studies Center at the University of Michigan. She received her PhD in the Department of Policy Analysis and Management at Cornell University in 2021, with a concentration in sociology and a minor in demography. Her research is primarily focused on how health and social policies have evolved in the United States and how the safety net impacts people’s lives.

Laura Tach

Laura Tach is an associate professor of sociology and public policy at Cornell University. Her research and teaching interests focus on poverty and social policy. She received her PhD in sociology and social policy at Harvard University in 2010. Prior to joining the Department of Policy Analysis and Management at Cornell, she was a Robert Wood Johnson Foundation Postdoctoral Scholar at the University of Pennsylvania.