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Public Housing Quotas and Segregation

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  • Benoît Schmutz

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique - ECM - Ecole Centrale de Marseille, Georgetown University - Georgetown University)

Abstract

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.

Suggested Citation

  • Benoît Schmutz, 2012. "Public Housing Quotas and Segregation," Working Papers halshs-00793467, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00793467 Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00793467
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    References listed on IDEAS

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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
    2. Leung, Charles Ka Yui & Sarpça, Sinan & Yilmaz, Kuzey, 2012. "Public housing units vs. housing vouchers: Accessibility, local public goods, and welfare," Journal of Housing Economics, Elsevier, vol. 21(4), pages 310-321.
    3. 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.
    4. 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.
    5. Baum-Snow, Nathaniel & Marion, Justin, 2009. "The effects of low income housing tax credit developments on neighborhoods," Journal of Public Economics, Elsevier, pages 654-666.
    6. Roland Hodler & Kurt Schmidheiny, 2006. "How Fiscal Decentralization Flattens Progressive Taxes," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, pages 281-304.
    7. 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, pages 953-966.
    8. Schmidheiny, Kurt, 2006. "Income segregation from local income taxation when households differ in both preferences and incomes," Regional Science and Urban Economics, Elsevier, vol. 36(2), pages 270-299, March.
    9. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, pages 33-62.
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    Cited by:

    1. Benoît Schmutz, 2015. "Spatial sorting of African Immigrants in the French Public Housing Market," The Review of Black Political Economy, Springer;National Economic Association, pages 247-270.

    More about this item

    Keywords

    public housing; segregation; sorting; Hotelling; rationing;

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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