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This dissertation aims to investigate alternative explanations for the adjustment of low-income inner-city minorities to residential locations. Particularly, this study searches for an answer to find the reason why low-income inner-city minorities do not move to residential locations with more job opportunities (suburbs). Much of the basis for the analysis in this dissertation derives from the irreversible investment theory under the assumption that moving can be considered as an irreversible investment. First, this study formulates a search model in which individuals simultaneously search for jobs and residential locations in two places: suburb and inner-city. Second, by employing The Panel Study of Income Dynamics (PSID) and Geocode files, this study attempts to address how social capital plays a role in households’ moving decisions under the irreversibility assumption. This study presents evidence that the social capital has a negative causal effect on moving decision, that is, the high levels of social capital reduce the probability of moving. |
