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Category Archives: J15

The Case for Clemency: Differential Impacts of Pretrial Detention on Case and Crime Outcomes

By George Rateb

Abstract
About half-million of individuals in US jails are detained pretrial while legally presumed
innocent. Using data on quasi-randomly assigned bail judges in the third-largest court system in
the U.S., we study the impact of pretrial detention on defendants’ court and crime outcomes
between 2008 and 2012. We supplement our primary analysis to document patterns on bail
amounts and how they differentially impact Black defendants relative to their white and Hispanic
counterparts. Instrumental variable estimates suggest that pretrial detention increases the
likelihood of being found guilty, mainly driven by the uptake of guilty pleas, especially for
minorities. By linking court and jail data, we provide mechanistic evidence that jail time is
positively correlated with the uptake of these guilty pleas. To the best of our knowledge, these
findings have not been empirically documented due to a lack of previous data availability.

Professor Bocar Ba, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor

JEL classification: C26; J15; K14

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Subprime’s Long shadow: Understanding subprime lending’s role in the St. Louis vacancy crisis

By Glen David Morgenstern

Abstract
Using loan-level data, this analysis attempts to connect the events of the subprime home loan boom to the current vacancy crisis in St. Louis, Missouri. Borrowers in Black areas in the north of St. Louis City and St. Louis County received subprime home loans at higher rates during the subprime boom period of 2003-2007 than those in White areas, with differences in balloon loans especially stark. Specifically, borrowers in Black neighborhoods received subprime loans more frequently than those with equal FICO scores in White neighborhoods. As a result of these differential loan terms, North City and inner ring “First Suburb” areas saw more foreclosure and
borrower payment delinquency, which in turn were highly associated with home vacancy, controlling for other risk factors. However, foreclosure was no longer a significant predictor of home vacancy
after controlling for demographic factors and FICO score, indicating that the unequal loan terms may have driven much of the increase in home vacancy in the St. Louis area since the Great Recession.

Professor Charles Becker, Faculty Advisor

JEL classification: R1; R3; R11; R31; J1; J15

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An Unequal Dream: The Mortgage Rate Premium Paid by Black Communities

By Michael Nicholson   

This paper analyzes loan pricing discrimination against predominantly black communities in U.S. mortgage markets. Building on previous literature, this paper posits that ceteris paribus predominantly black communities continue to face economically significant discrimination in mortgage pricing. Ultimately, this paper concludes that predominantly black communities face 10-14 basis points of pricing discrimination in mortgage loans which corresponds to 12.6-17.6% higher rate spreads. This estimation comes after accounting for geographic and lender effects, borrower quality, tract-level characteristics, and loan type. These results confirm past findings of pricing discrimination and illustrate yet another financial barrier for black households in this country.

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Advisors: Professor Emma Rasiel, Professor Kent Kimbrough | JEL Codes: R2, J15, G21

Female Labor Force Participation in Turkic Countries: A Study of Azerbaijan and Turkey

By Natasha Jo Torrens

Encouraging female labor force participation (FLFP) should be a goal of any country attempting to increase their productive capacity. Understanding the determinants and motivations of labor force participation requires isolating the factors that influence a woman’s decision to enter or leave formal employment. In this thesis, I utilize data from the Demographics and Health Surveys to explain the role of social conservatism in promoting or limiting participation in the labor force. I focus on ever-married women in Azerbaijan and Turkey to provide a lens through which to explain the unexpectedly low FLFP of Turkey. Though most prior research attempts to explain Turkey’s low FLFP rate by comparisons to other OECD countries, my study looks at Turkey through the context of other Turkic cultures to explore cultural factors driving labor force participation for ever-married women. This study finds a negative correlation between conservatism and the likelihood of participating in the labor force for ever married women in Azerbaijan, and a larger, positive relationship in Turkey.

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Advisors: Professor Charles Becker, Professor Didem Havlioğlu, Professor Kent Kimrbough | JEL Codes: C50, J16, N95

Asylum Determination within the European Union (EU): Whether Capacity and Social Constraints Impact the Likelihood of Refugee Status Determination

By Louden Paul Richason

This paper analyzes whether capacity and social constraints impact acceptance rates for asylum seekers in the European Union from 2000-2016. Theoretically people should receive asylum based on the criteria outlined in international law – a well founded fear of persecution – but the influx and distribution of applicants in the European Union suggests that this may not hold in practice. For a group of pre identified “legitimate” asylum cases, this paper finds that surges in applications in a country (i.e. capacity constraints) have a positive and statistically significant correlation with acceptance rates, while the percentage of migrants in a country (i.e.  social constraints) has a negative and statistically significant correlation with acceptance rates. This suggests that the burden of proof becomes easier during a surge in total applications in a country. However, as the international migrant stock in that country increases, it is more difficult for that same group of applicants to receive asylum.

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Advisors: Professor Suzanne Shanahan, Professor Michelle Connolly | JEL Codes: D73, D78, F22, H12, J11, J15, K37, O52

Immigrant Workers in a Changing Labor Environment: A study on how technology is reshaping immigrant earnings

By Grace Peterson

This research determines how automation affects immigrant wages in the US and how closely this impact follows the skills-biased technical change (SBTC) hypothesis. The present study addresses this question using American Community Survey (ACS) data from 2012 to 2016 and a job automation probability index to explain technological change. This research leverages OLS regressions to evaluate real wage drivers, grouping data by year, immigration status, and education level. According to the SBTC hypothesis, high skill immigrant wages should be less negatively affected by technological change than low skill immigrant wages. Univariate analysis suggests that the SBTC hypothesis is even stronger for US = immigrants than native-borns, as high skill immigrants have a lower average probability than low skill immigrants of having their jobs automated, and the difference in effect on high versus low skilled workers is larger for immigrant than native-borns. However, multivariate analysis asserts that technological change affects low skill immigrants’ wages less than high skilled individuals’ wages, which counters the SBTC hypothesis.

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Advisors: Professor Grace Kim | JEL Codes: J15, J24, J31, J61, E24

Endogeneity in the Decision to Migrate: Changes in the Self-Selection of Puerto Rican Migrants before, during, and after the Great Recession

By Aasha Reddy 

Migrants self-select on characteristics such as income. We use the U.S. Census’ ACS and PRCS to study changes in selection patterns of Puerto Rican migrants to the to the U.S. mainland (50 states) before, during, and after the Great Recession (2005 to 2016). We construct counterfactual income densities to compare incomes of Puerto Rican migrants to the mainland versus incomes of island residents under equivalent returns to skill. We examine where Puerto Rican migrants to the mainland tend to fall in the island’s income distribution and find that Puerto Rican migrants tend to come from the top 20% of the island’s income distribution. This pattern remained stable with little to no effect of the Great Recession on selectivity patterns.

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Advisors: William Darity and Michelle Connolly | JEL Codes: J15, J61, O15

The Effect of Minority History on Racial Disparities in the Mortgage Market: A Case Study of Durham and New Haven

By Jisoo Yoon

In the aftermath of the housing market crash, the concentration of subprime mortgage loans in minority neighborhoods is a current and long-standing issue. This study investigates the presence of racial disparities in mortgage markets by examining two cities with contrasting histories of African American and Hispanic establishment: Durham, North Carolina and New Haven, Connecticut. This study examines data by the Home Mortgage Disclosure Act (HMDA), and distills the effect of minority legacy on the perception of racial risk by using econometric instruments to separate the behavior of national lenders and local lenders. The econometric methods allow national lenders to reflect objective risk measures and neighborhood race dynamics, while local lenders reflect subjective attitudes towards certain races. With its longer history of African American presence, Durham shows a positive attitude towards Black borrowers at the local level, while New Haven shows a more favorable attitude towards its Hispanic residents. Nonetheless, racial legacy also materializes as a negative factor in the form of increased residential segregation and spillover effects. Furthermore, a temporal variation analysis of pre- and post-mortgage market reform data affirms the disappearance of racial bias and continued presence of spillover risk in Durham.

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Advisor: Christopher Timmins | JEL Codes: C01, G21, J15, R21, R23, R31 | Tagged: Econometrics, Mortgages, Economics of Minorities, Races, Census, Migration, Population, Neighborhood Characteristics, Housing Supply and Market

Security Without Equity? The Effect of Secure Communities on Racial Profiling by Police

By Jack Willoughby

Anecdotal and circumstantial evidence suggest that the implementation of Secure Communities, a federal program that allows police officers to more easily identify illegal immigrants, has increased racial bias by police. The goal of this analysis is to empirically evaluate the effect of Secure Communities on racial bias by police using motor vehicle stop and search data from the North Carolina State Bureau of Investigation. This objective differs from most previous research, which has largely attempted to quantify racial profiling for a moment in time rather than looking at how an event influences racial profiling. I examine the effects of Secure Communities on police treatment of Hispanics vs. whites with an expanded difference-in-difference approach that looks at outcomes in
motor vehicle search success rate, search rate conditional on a police stop, stop rate, and police action conditional on stop. Statistical analyses yield no evidence that the ratification of Secure Communities increased racial profiling against Hispanics by police. This finding is at odds with the anecdotal and circumstantial evidence that has led many to believe that the ratification of Secure Communities led to a widespread increase in racial profiling by police, a discrepancy that should caution policy makers about making decisions driven by stories and summary statistics.

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Advisor: Frank Sloan | JEL Codes: J15, K14, K37, K42 | Tagged: Racial Policing, Bias, Immigration Law, Secure Communities

Economic Racism: A Look at Rental Prices in 1930

By Basel Fakhoury

The Great Migration caused massive demographic changes in Northeastern and Midwestern cities as African Americans moved from the South to the North. These changes led to economic discrimination and segregation within northern cities. This paper compares African American and white rental prices in four major cities: Chicago, Detroit, New York City, and Philadelphia in an effort to see how this discrimination and segregation affected rental prices. The results consistently show that in the most precise geographic area, prices rise as the concentration of blacks in those neighborhoods rise, which I believe is a result of overcrowding.

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Advisor: Patrick Bayer | JEL Codes:  J1, J11, J15, R31 | Tagged: Economic Discrimination, Housing Markets, Segregation, The Great Migration

Questions?

Undergraduate Program Assistant
Matthew Eggleston
dus_asst@econ.duke.edu

Director of the Honors Program
Michelle P. Connolly
michelle.connolly@duke.edu