Crime, house prices, and inequality: the effect of UPPs in Rio
AbstractWe use a recent policy experiment in Rio de Janeiro, the installation of permanent police stations in low-income communities (or favelas), to quantify the relationship between a reduction in crime and the change in the prices of nearby residential real estate. Using a novel data set of detailed property prices from an online classifieds website, we find that the new police stations (called UPPs) had a substantial effect on the trajectory of property values and certain crime statistics since the beginning of the program in late 2008. We also find that the extent of inequality among residential prices decreased as a result of the policy. Both of these empirical observations are consistent with a dynamic model of property value in which historical crime rates have persistent effects on the price of real estate.
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Bibliographic InfoPaper provided by Federal Reserve Bank of New York in its series Staff Reports with number 542.
Date of creation: 2012
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-21 (All new papers)
- NEP-LAM-2012-03-21 (Central & South America)
- NEP-URE-2012-03-21 (Urban & Real Estate Economics)
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