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Public Housing Quotas and Segregation

  • Benoît Schmutz

    ()

    (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS and Georgetown University)

This paper adapts a framework à-la Hotelling to an urban context in order to study the impact of public housing on the level of segregation in a fixed-size city where consumers differ both in income and taste. In this city, the market allocation of the population is characterized by partial segregation: both rich and poor consumers can be found in both neighborhoods. Public authorities replace a fraction of the housing stock with public housing. This policy will not decrease segregation if applicants are not screened according to their income level. Any departure from the optimal level of screening has to be compensated for by a larger program. The final policy mix will then be determined by the extent to which public authorities have the ability, either to screen applicants, or to fund more public units. However, this trade-off will be softened when taking neighborhood externalities into account, thanks to a snowball effect of public housing on neighborhood quality.

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File URL: http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2012_-_nr_28.pdf
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Paper provided by Aix-Marseille School of Economics, Marseille, France in its series AMSE Working Papers with number 1228.

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Length: 36 pages
Date of creation: 17 Oct 2012
Date of revision:
Handle: RePEc:aim:wpaimx:1228
Contact details of provider: Web page: http://www.amse-aixmarseille.fr/en

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  1. Eriksen, Michael D. & Rosenthal, Stuart S., 2010. "Crowd out effects of place-based subsidized rental housing: New evidence from the LIHTC program," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 953-966, December.
  2. Baum-Snow, Nathaniel & Marion, Justin, 2009. "The effects of low income housing tax credit developments on neighborhoods," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 654-666, June.
  3. Leung, Charles Ka Yui & Sarpca, Sinan & Yilmaz, Kuzey, 2012. "Public housing units vs. housing vouchers: accessibility, local public goods, and welfare," MPRA Paper 40990, University Library of Munich, Germany.
  4. Epple, Dennis & Platt, Glenn J., 1998. "Equilibrium and Local Redistribution in an Urban Economy when Households Differ in both Preferences and Incomes," Journal of Urban Economics, Elsevier, vol. 43(1), pages 23-51, January.
  5. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  6. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
  7. Kurt Schmidheiny, 2005. "Income Segregation from Local Income Taxation When Households Differ in Both Preferences and Incomes," Discussion Papers Series, Department of Economics, Tufts University 0509, Department of Economics, Tufts University.
  8. Heffley, Dennis, 1998. "Landlords, tenants and the public sector in a spatial equilibrium model of rent control," Regional Science and Urban Economics, Elsevier, vol. 28(6), pages 745-772, November.
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