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Abstract for:

The Economic Impacts of Constraining Home Investments

Christian A. L.  Hilber,  Olivier  Schöni,  July 2018
Paper No' CEPDP1556: | Full paper (pdf)
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Keywords: second homes, wealth inequality, land use regulation, housing policy, house prices, unemployment

JEL Classification: D63; G12; R11; R21; R31; R52

Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: CEP Discussion Papers
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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.