Working Papers
- “Local Discretion in Low-Income Housing Policy: Evidence from France”
- Abstract: Governments seek to promote affordable housing in mixed-income neighborhoods while preserving local municipal discretion over land use. Municipalities who retain local discretion better cater to local preferences, but only internalize preferences of incumbent residents and underprovide affordable housing. I quantify the trade-off in allowing municipal discretion over affordable housing provision when residents dislike low-income neighbors. I leverage a discontinuity in a French policy which allows municipalities to build more social housing or pay a fine. Limiting local discretion increases social housing by 31% and induces a compositional shift in private housing: high-income households move out and low-income households move in. I then estimate a structural location choice model to quantify the welfare effects of local discretion over social housing. Using the policy to identify preferences for low-income neighbors, I find that all households dislike low-income peers, especially high-income households who are willing-to-pay €538 per month to avoid a 20 p.p. increase in the share of low-income residents. Prohibiting local discretion by distributing social housing uniformly across municipalities increases the median municipal share of low-income households from 24% to 26%, although it would be twice larger without subsequent migration. While entirely removing local discretion reduces socioeconomic segregation, private residents bear large welfare cost which are unlikely to be offset by the welfare gains to social housing recipients moving to wealthier neighborhoods.
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Works in Progress
Research Interests
- Industrial Organization
- Public Economics
- Urban Economics