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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.

Suggested Citation

  • Hoff, Karla & Sen, Arijit, 2004. "Homeownership, community interactions, and segregation," Policy Research Working Paper Series 3316, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3316
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    References listed on IDEAS

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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. Philippe Bracke & Christian Hilber & Olmo Silva, 2012. "Homeownerhip and Entrepreneurship," SERC Discussion Papers 0103, Spatial Economics Research Centre, LSE.
    4. Christian A. L Hilber & Jan Rouwendal & Wouter Vermeulen, 2021. "Local economic conditions and the nature of new housing supply," Journal of Economic Geography, Oxford University Press, vol. 21(3), pages 339-366.
    5. Hilber, Christian A.L., 2010. "New housing supply and the dilution of social capital," Journal of Urban Economics, Elsevier, vol. 67(3), pages 419-437, May.
    6. Neumann, Uwe, 2013. "Are My Neighbours Ageing Yet? Local Dimensions of Demographic Change in German Cities," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 189-209.
    7. Brock, William A. & Durlauf, Steven N., 2007. "Identification of binary choice models with social interactions," Journal of Econometrics, Elsevier, vol. 140(1), pages 52-75, September.
    8. 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.
    9. ÖZGÜR, Onur & BISIN, Alberto, 2011. "Dynamic Linear Economies with Social Interactions," Cahiers de recherche 04-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    10. Henry G. Overman, 2004. "Can we learn anything from economic geography proper?," Journal of Economic Geography, Oxford University Press, vol. 4(5), pages 501-516, November.
    11. William A. Brock & Steven N. Durlauf, 2003. "Multinomial Choice with Social Interactions," NBER Technical Working Papers 0288, National Bureau of Economic Research, Inc.
    12. 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.
    13. Blume,L.E. & Durlauf,S.N., 2005. "Identifying social interactions : a review," Working papers 12, Wisconsin Madison - Social Systems.
    14. Tuukka Saarimaa & Mika Kortelainen, 2012. "Do Homeowners Benefit the Neighborhood? Evidence from Semiparametric Hedonic Regressions," ERSA conference papers ersa12p472, European Regional Science Association.
    15. Christian A. L. Hilber & Tracy M. Turner, 2014. "The Mortgage Interest Deduction and its Impact on Homeownership Decisions," The Review of Economics and Statistics, MIT Press, vol. 96(4), pages 618-637, October.
    16. Patricio S. Dalton & Sayantan Ghosal & Anandi Mani, 2016. "Poverty and Aspirations Failure," Economic Journal, Royal Economic Society, vol. 126(590), pages 165-188, February.
    17. 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.
    18. Mika Kortelainen & Tuukka Saarimaa, 2012. "Do Homeowners Benefit Urban Neighborhoods? Evidence from Housing Prices," SERC Discussion Papers 0110, Spatial Economics Research Centre, LSE.
    19. Odermatt, Reto & Stutzer, Alois, 2020. "Does the Dream of Home Ownership Rest upon Biased Beliefs? A Test Based on Predicted and Realized Life Satisfaction," IZA Discussion Papers 13510, Institute of Labor Economics (IZA).
    20. repec:zbw:rwirep:0319 is not listed on IDEAS
    21. Hoff, Karla, 2008. "Joseph E. Stiglitz," Policy Research Working Paper Series 4478, The World Bank.

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