Working Paper: CEPR ID: DP17132
Authors: Hans Koster; Jos van Ommeren
Abstract: We analyse the effects of the Dutch Act on Extraordinary Measures for Urban Problems. This allows local governments to prohibit non-employed households from entering into public housing in targeted neighbourhoods to improve social mixing. We show that the Act is largely ineffective in changing the demographic composition of neighbourhoods. At the same time, due to prominent advertising of targeted deprived neighbourhoods, a stigma may have been created. We adopt a hedonic price approach and use a boundary-discontinuity (within 100m of neighbourhood borders) to quantify the overall effect of the policy. We thus exploit spatio-temporal differences in house prices and find a sizeable price reduction of about 3-5%. The magnitude of this effect is confirmed for two other national place-based policy programmes, adding to the external validity of these findings. Our results suggest that neighbourhood stigma is important, which implies that individuals living in deprived neighbourhoods experience dis-utility from living in a place with a low status.
Keywords: place-based policies; redlining; stigma effects; amenities; house prices
JEL Codes: H23; H31; J60; R30; R38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Dutch Act (Y20) | reduction in the share of nonemployed households in public housing (R28) |
| announcement of the act (Y20) | stigma effect (J70) |
| stigma effect (J70) | significant price reduction of house prices (R31) |
| Dutch Act (Y20) | significant price reduction of house prices (R31) |
| announcement of the act (Y20) | significant price reduction of house prices (R31) |