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Homeownership, community interactions, and segregation

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  • Hoff, Karla
  • Sen, Arijit

Abstract

The authors consider a multi-community city where community quality is linked to residents'civic efforts, such as being proactive in preventing crime and ensuring the quality of publicly provided goods. Homeownership increases incentives for such efforts, but credit market imperfections force the poor to rent. Within-community externalities can lead to segregated cities-with the rich living with the rich in healthy homeowner communities, and the poor living with the poor in dysfunctional renter communities. The pattern of tenure segregation across communities in the United States accords well with the study's prediction. The authors analyze alternative tax-subsidy policies to alleviate inefficiencies in the housing market and identify the winners and losers under such policies.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3316.

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Date of creation: 01 May 2004
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Handle: RePEc:wbk:wbrwps:3316

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Keywords: Environmental Economics&Policies; Economic Theory&Research; Community Development and Empowerment; Housing&Human Habitats; Education and Society; Housing&Human Habitats; Environmental Economics&Policies; Governance Indicators; Economic Theory&Research; Education and Society;

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  1. Timothy Besley & Robin Burgess, 2002. "The Political Economy Of Government Responsiveness: Theory And Evidence From India," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1415-1451, November.
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  15. DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, Elsevier, vol. 45(2), pages 354-384, March.
  16. Fernández, Raquel, 2001. "Sorting, Education and Inequality," CEPR Discussion Papers 3020, C.E.P.R. Discussion Papers.
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Cited by:
  1. H. Spencer Banzhaf & Randall P. Walsh, 2010. "Segregation and Tiebout Sorting: Investigating the Link between Investments in Public Goods and Neighborhood Tipping," NBER Working Papers 16057, National Bureau of Economic Research, Inc.
  2. Lanny Arvan & David Nickerson, 2006. "Private Investment, Public Aid and Endogenous Divergence in the Evolution of Urban Neighborhoods," The Journal of Real Estate Finance and Economics, Springer, vol. 32(1), pages 83-100, February.
  3. Christian A. L. Hilber, 2010. "New Housing Supply and the Dilution of Social Capital," SERC Discussion Papers 0042, Spatial Economics Research Centre, LSE.
  4. Arthur Grimes & Suzi Kerr & Andrew Aitken, 2004. "Bi-Directions Impacts of Economic, Social and Environmental Changes and the New Zealand Housing Market," Working Papers 04_09, Motu Economic and Public Policy Research.
  5. Onur Ozgur & Alberto Bisin, 2011. "Dynamic linear economies with social interactions," Levine's Working Paper Archive 786969000000000036, David K. Levine.
  6. Uwe Neumann, 2012. "Are My Neighbours Ageing Yet? Local Dimensions of Demographic Change in German Cities," Ruhr Economic Papers 0319, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  7. Christian A. L. Hilber & Tracy M. Turner, 2010. "The Mortgage Interest Deduction and its Impact on Homeownership Decisions," SERC Discussion Papers 0055, Spatial Economics Research Centre, LSE.
  8. Bento, Antonio M. & Franco, Sofia F. & Kaffine, Daniel T., 2011. "Effectiveness of housing revitalization subsidies in the presence of zoning," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 196-206, May.
  9. Mika Kortelainen & Tuukka Saarimaa, 2012. "Do Homeowners Benefit Urban Neighborhoods? Evidence from Housing Prices," SERC Discussion Papers 0110, Spatial Economics Research Centre, LSE.

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