|This centre is a member of The LSE Research Laboratory [RLAB]: CASE | CVER | CEP | SERC | STICERD||Cookies?|
Paper No' SERCDP0110: | Full paper
Save Reference as: BibTeX File | EndNote Import File
Keywords: Homeownership; neighborhood effects, partial linear model, set identification
JEL Classification: D62; R21; R28
Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: SERC Discussion Papers
Share this page: Google Bookmarks | Facebook | Twitter
Abstract:Homeownership is heavily subsidized in many countries mainly through the tax code. The adverse effects of lenient tax treatment of owner-occupied housing on economic efficiency and growth are large and well documented in the economics literature. The main argument in favor of subsidizing owner-occupied housing is that it creates positive externalities that offset these adverse effects. This paper tests whether homeowners create positive externalities to their immediate neighborhood that capitalize into housing prices in multi-storey buildings. Using semiparametric hedonic regressions with and without instrumental variables we find no evidence of positive externalities from neighborhood homeownership rate. This result is robust to relaxing the identification assumptions of our instrument using a recently developed set identification method. Our results suggest that the adverse efficiency effects of lenient tax treatment of owner-occupied housing are not offset by positive externalities.
Copyright © RLAB & LSE 2003 - 2016 | LSE, Houghton Street, London WC2A 2AE | Contact: RLAB | Site updated 30 June 2016