Published: Dec. 1, 2020

Journal of Political Economy, 127:3: 1063-1117, 2019.
 
Rebecca Diamond & Timothy McQuade
We nonparametrically estimate spillovers of properties financed by the Low Income Housing Tax Credit (LIHTC) onto neighborhood residents by developing a new difference-in-differences style estimator. LIHTC development revitalizes low-income neighborhoods, increasing house prices 6.5%, lowering crime rates, and attracting racially and income diverse populations. LIHTC development in higher income areas causes house price declines of 2.5% and attracts lower income households. Linking these price effects to a hedonic model of preferences, LIHTC developments in low-income areas cause aggregate welfare benefits of $116 million. Affordable housing development acts like a place-based policy and can revitalize low-income communities.
 
https://www.nber.org/papers/w22204
https://www.journals.uchicago.edu/doi/abs/10.1086/701354?af=R&mobileUi=0&