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New Housing Supply and the Dilution of Social Capital

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Author Info
Hilber, Christian A. L.

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Abstract

This paper examines the role of local housing market conditions for social capital accumulation and neighborhood club good provision. A model of individual investment decisions predicts that in a setting with high property transaction costs (i) homeowners are more likely to invest in social capital than renters and (ii) the positive link between homeownership and social capital is stronger in more built-up neighborhoods with inelastic supply of new housing. In these neighborhoods homeowners are largely protected from inflows of newcomers that would dilute the net benefit from social capital in the longer run. Empirical evidence from the Social Capital Community Benchmark Survey confirms the model predictions. Instrumental variable estimates suggest that the effects are causal.

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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5134.

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Date of creation: 02 Aug 2007
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Handle: RePEc:pra:mprapa:5134

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Related research
Keywords: House price capitalization social capital homeownership land and housing supply neighborhood club goods.

Find related papers by JEL classification:
R21 - Urban, Rural, and Regional Economics - - Household Analysis - - - Housing Demand
R31 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Housing Supply and Markets
D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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References listed on IDEAS
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