The Welfare Impacts of Urban Renewal and Forced Relocation: Evidence from Chicago’s HOPE VI Demolitions

This paper studies one of the largest spatial redevelopment efforts in the United States: HOPE VI public housing demolitions. Focusing on Chicago, we estimate a neighborhood choice model combining administrative records tracking displaced public-housing residents with Census Bureau data capturing citywide sorting and prices. Demolitions generate large welfare losses driven by displacement costs, partially offset by housing vouchers. Demolitions also raise housing prices and reshape neighborhood composition, with gains concentrated among higher-income homeowners. Counterfactuals show that more generous vouchers and counseling programs mitigate but do not eliminate displaced residents’ losses, while expanded redevelopment yields larger citywide gains through general-equilibrium effects.