The economic impacts of constraining home investments

Christian Hilber and Olivier Schöni

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We investigate how political backlash against wealthy investors in high-amenity places affects local residents. We exploit a quasi-natural experiment: the 'Swiss Second Home Initiative', which banned the construction of new second homes in desirable tourist locations. Consistent with our model, we find that the ban substantially lowered (increased) the price growth of primary (second) homes and increased the unemployment growth rate in the affected areas. Our findings suggest that the negative effect on local economies dominated the positive amenity-preservation effect. Constraining second home investments in locations where primary and second homes are not close substitutes may reinforce wealth inequality.

Keywords: second homes; wealth inequality; land use regulation; housing policy; house prices; unemployment (search for similar items in EconPapers)
JEL-codes: D63 G12 R11 R21 R31 R52 (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-geo and nep-ure
References: View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp1556

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