Residential Location Models: Analyzing Segregation, Borrowing Constraints, and Policy Implications

Nathalie Picard and André de Palma

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: This chapter explores residential location models through a comprehensive review of the literature, key facts, theoretical frameworks, estimation methods, and simulation techniques. It focuses on the factors driving residential segregation using a standard individual discrete choice model, specifically a nested logit framework. This model incorporates household preferences for local amenities, dwelling types, and homeownership. The analysis is extended by introducing borrowing constraints that restrict some households' ability to purchase property. To illustrate, the framework is applied to the Paris region. By relaxing borrowing constraints, we simulate a hypothetical redistribution of socio-demographic characteristics across the region and demonstrate how this tool can be employed for policy analysis. A comparison of actual and simulated distributions reveals that easing credit constraints encourages households to relocate farther from the city center. However, if only poor households benefit, they are less likely to integrate with wealthier households, thereby intensifying segregation. This finding highlights those policies designed to support low-income households might inadvertently increase segregation citywide, necessitating careful re-evaluation.

Keywords: Housing choice; financial constraints; borrowing; segregation; suburban areas; urban sprawl; endogenous choice sets. (search for similar items in EconPapers)
JEL-codes: R21 R23 R31 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-cmp and nep-dcm
References: Add references at CitEc
Citations:

Downloads: (external link)
http://beta.u-strasbg.fr/WP/2025/2025-33.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2025-33

Access Statistics for this paper

More papers in Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg Contact information at EDIRC.
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).