Lucie Letrouit

“Externalities from urban renewal: evidence from a French program”

(avec Sylvain Chareyron, Florence Goffette-Nagot)

Abstract

We contribute to the evaluation of urban renewal policies based on a large-scale program launched in France in 2004 in almost 600 neighborhoods. Using a novel estimator aimed at avoiding bias in the estimation of treatment effects heterogeneous across treatment groups or time periods, and complementing its results with a more precise double fixed effects difference-in-differences estimator, we find no significant aggregate impact of the program on housing prices. We identify three lines of explanation that can contribute to make sense of this lack of aggregate impact: (1) an intensity effect, according to which a number of neighborhoods did not get enough funding to affect the housing market, (2) a stigma effect, which prevented the poorest renovated neighborhoods and the neighborhoods with the highest share of public housing to experience a sizable increase in housing demand and thus in housing prices, and (3) an operation type effect, whereby construction/demolition and renovation operations, which concentrated most of the program’s funding, appear to have a smaller impact on housing prices than public equipment operations.