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Economic effects of upfront subsidies to ownership: The case of the Prêt à Taux Zéro in France

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  • Gobillon, Laurent
  • le Blanc, David

Abstract

This article analyses some effects of the French upfront subsidy to homeownership called Prêt à Taux Zéro (PTZ) introduced in 1996. The PTZ can be viewed as a downpayment subsidy to low and middle-income first-time buyers. The effects of the subsidy are modelled by simulating the introduction of the PTZ in an econometric model of mobility and tenure choice estimated on micro-data. Our results show that the PTZ significantly increases access to ownership by allowing some households to leave the rental sector sooner. However, the PTZ generates a large windfall effect. We estimate that 85% of the beneficiaries in a 4-year period would still have moved to own in the absence of the subsidy. As a consequence, the PTZ has a rather low multiplier effect, which we estimate at around 1.3. Our simulations also show that the PTZ may not help to improve the overall quality of new construction in France.

Suggested Citation

  • Gobillon, Laurent & le Blanc, David, 2008. "Economic effects of upfront subsidies to ownership: The case of the Prêt à Taux Zéro in France," Journal of Housing Economics, Elsevier, vol. 17(1), pages 1-33, March.
  • Handle: RePEc:eee:jhouse:v:17:y:2008:i:1:p:1-33
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    References listed on IDEAS

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    Cited by:

    1. Laurent Gobillon & François-Charles Wolff, 2009. "Housing and location choices of retiring households: Evidence from France," PSE Working Papers hal-00424096, HAL.
    2. Gobillon, Laurent & Solignac, Matthieu, 2015. "Homeownership of immigrants in France: selection effects related to international migration flows," CEPR Discussion Papers 10975, C.E.P.R. Discussion Papers.
    3. Suntum, Ulrich van, 2009. "Housing, taxation and retirement provision," Journal of Housing Economics, Elsevier, vol. 18(3), pages 249-255, September.
    4. Goffette-Nagot, Florence & Sidibé, Modibo, 2016. "Housing wealth accumulation: The role of public housing," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 12-22.
    5. repec:hal:wpaper:halshs-01233069 is not listed on IDEAS
    6. Sophie Dantan & Nathalie Picard, 2016. "Effect Of Borrowing Constraints On Location Choice: Evidence From The Paris Region," Working Papers hal-01294215, HAL.
    7. Dietsch, Michel & Petey, Joël, 2015. "The credit-risk implications of home ownership promotion: The effects of public subsidies and adjustable-rate loans," Journal of Housing Economics, Elsevier, vol. 28(C), pages 103-120.

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