Climate Change , House Prices and Inequality in the United States

This dissertation investigates the multifaceted relationship between climate change, housing values, and inequality in the United States using county-level data from 2005 to 2022. In Chapter 1, we examine the heterogeneous impact of climate change on house prices, employing fixed-effect panel data analysis, Difference-in-Differences (DiD) with Propensity Score Matching (PSM), and fixed-effect panel quantile regressions. Findings indicate that climate change significantly impacts housing values, but this effect is not uniform. Low-value homes experience substantial price discounts due to heightened climate risk perception, while high-value homes are largely unaffected. This heterogeneity suggests that climate change poses a greater financial threat to middle- and low-income households, who are more likely to own low-value homes. Implications for policymakers include regulating climate risk behavior in lending to prevent systemic vulnerabilities similar to those seen in past financial crises. In Chapter 2, we explore the role of the housing market as a channel through which climate change exacerbates inequality. Using proxies for income inequality (Gini coefficient) and wealth inequality (upper-to-lower house value ratio), this analysis reveals that climate change disproportionately increases economic disparities by impacting low-value housing. Methodologically, we employ DiD with PSM and fixed-effect panel data analysis to capture the causal impact of natural events on inequality. Results show that when house prices are controlled, the significant relationship between climate change and inequality diminishes, underscoring the housing market’s pivotal role in this dynamic. Policy recommendations include targeted interventions such as subsidies and insurance incentives to support housing stability in climate-vulnerable, low-income areas.