The Review of Economics and Statistics Vol. 106 No. 6 2024
The Price of Inclusion: Evidence from Housing Developer Behavior
Abstract
In many cities, incentives and regulations lead developers to integrate low-income housing into market-rate buildings. How cost-effective are these policies? I study take-up of a tax incentive in New York City using a model in which developers trade off between tax savings and pretax income. Estimating the model using policy variation and microdata on development from 2003 to 2015, I find a citywide marginal fiscal cost of $1.6 million per low-income unit. Differences in neighborhoods, not developer incidence, explain the cost premium over other housing programs. Weighing costs against estimates of neighborhood effects, I conclude middle-class neighborhoods offer “opportunity bargains.”
- DOI
- 10.1162/rest_a_01231
- Volume
- 106
- Issue
- 6
- Pages
- 1588-1606
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref