The Economic and health consequences of lead paint abatement regulations

Abstract

This thesis consists of three chapters on the economic and health consequences of lead paint abatement regulations. The first chapter studies the effect of state-level lead paint abatement regulations on housing markets, focusing on house prices, rents and the allocation of households across houses with different health risks. State lead abatement mandates require owners of old houses to mitigate lead hazards in the presence of small children. I estimate the effects of these mandates on the housing market using a triple differences strategy that exploits differences by state, year, and housing vintage. The estimates suggest a large fraction of the abatement costs fall on property owners, with house prices for multi-family properties declining by 6.4% and single-family homes declining 4.3%. These effects persist for at least a decade, consistent with low abatement rates. Families with small children bear part of the mandates' costs, too: after a mandate, these families are 17% less likely to live in old houses, and they pay higher rents for safer homes. These results suggest that the mandates have important real distributional consequences despite evidence of low abatement rates. The second chapter analyzes the impact of state-level lead paint abatement regulations on children's health and educational outcomes in a difference-in-differences framework.. Lead poisoning has long-lasting consequences on children's health, as well as on their cognitive and non-cognitive abilities. Abatement mandates reduce the rate of elevated blood lead levels by 29%. Moreover, the mandates decrease the rate of enrollment in special education in exposed cohorts by 8.1%, indicating a reduction in the number of children with disabilities. A back of the envelope calculation suggests that this decrease in the rate of enrollment in special education induces savings between $17.5 and $111 million per state-cohort on average, while the increased lifetime earnings from the reduction in blood lead levels could lead to increased tax revenues in the order of $2.8 million per state-cohort on average. However, the reduction in special education enrollment does not appear to be reflected in improvements in educational outcomes, as I find no evidence that average fourth-grade test scores and disciplinary actions change with the mandates. The third chapter analyzes both the selection of houses into compliance and individuals' valuation of lead-safe housing using address-level housing, environmental and health data. Lead paint in old homes is the major source of lead poisoning for US children despite federal and local regulations concerning the mitigation of lead hazards and the disclosure of lead status of a house whenever known. By leveraging detailed information on property owners, I find that small landlords are more likely to have non-compliant properties. Distressed landlords as indicated either by high loan to value ratios or by distressed sales have similar bad outcomes. By leveraging sales data, I estimate that the finding of a lead hazard significantly decreases the value of a house.