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Crime, house prices, and inequality: the effect of UPPs in Rio

Claudio Frischtak and Benjamin Mandel ()

No 542, Staff Reports from Federal Reserve Bank of New York

Abstract: We use a recent policy experiment in Rio de Janeiro, the installation of permanent police stations in low-income communities (or favelas), to quantify the relationship between a reduction in crime and the change in the prices of nearby residential real estate. Using a novel data set of detailed property prices from an online classifieds website, we find that the new police stations (called UPPs) had a substantial effect on the trajectory of property values and certain crime statistics since the beginning of the program in late 2008. We also find that the extent of inequality among residential prices decreased as a result of the policy. Both of these empirical observations are consistent with a dynamic model of property value in which historical crime rates have persistent effects on the price of real estate.

Keywords: amenity value; real estate; wealth distribution (search for similar items in EconPapers)
JEL-codes: K42 O15 R30 O18 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2012
New Economics Papers: this item is included in nep-lam and nep-ure
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