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2013
- handle: 10670/1.ox3nnz
- 1697-6223
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Urban Public Economics Review
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Benoît Schmutz, « Public Housing Quotas and Segregation », Urban Public Economics Review, ID : 10670/1.ox3nnz
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"This paper adapts a framework à-la Hotelling to an urban context 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 may only decrease segregation if applicants are 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 is determined by public authorities’ ability 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."