Neighbourhood stigma and place-based policies

Hans Koster and Jos van Ommeren

No 17132, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We analyse the effects of the Dutch Act on Extraordinary Measures for Urban Problems. This allows local governments to prohibit non-employed households from entering into public housing in targeted neighbourhoods to improve social mixing. We show that the Act is largely ineffective in changing the demographic composition of neighbourhoods. At the same time, due to prominent advertising of targeted deprived neighbourhoods, a stigma may have been created. We adopt a hedonic price approach and use a boundary-discontinuity (within 100m of neighbourhood borders) to quantify the overall effect of the policy. We thus exploit spatio-temporal differences in house prices and find a sizeable price reduction of about 3-5%. The magnitude of this effect is confirmed for two other national place-based policy programmes, adding to the external validity of these findings. Our results suggest that neighbourhood stigma is important, which implies that individuals living in deprived neighbourhoods experience dis-utility from living in a place with a low status.

Keywords: Place-based policies; Redlining; Stigma effects; Amenities; House prices (search for similar items in EconPapers)
JEL-codes: H23 H31 J60 R30 R38 (search for similar items in EconPapers)
Date: 2022-03
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