Homeownership, Labor Supply, and Neighborhood Quality

Naomi Hausman*, Tamar Ramot-Nyska, Noam Zussman

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


This paper provides evidence on the external benefits of homeownership among low-income populations. A natural experiment in Israel generated large changes in neighborhood homeownership rates while holding fixed the residents and housing stock, two primary sources of bias in traditional estimates. When public housing tenants are given the opportunity to buy their units, buyers increase labor supply. Effects are felt in the neighborhood: when homeownership rises by 10 pp, neighborhood home prices rise 1.5-2 percent. Instrumenting for purchases using government discounts generates similar results. Results are relevant for policies using financial incentives to increase homeownership among low-income populations.

Original languageAmerican English
Pages (from-to)193-230
Number of pages38
JournalAmerican Economic Journal: Economic Policy
Issue number2
StatePublished - 2022

Bibliographical note

Funding Information:
* Hausman: Department of Economics, The Hebrew University of Jerusalem (email: naomi.hausman@mail. huji.ac.il); Ramot-Nyska: Bank of Israel (email: tamar.ramot-nyska@boi.org.il); Zussman: Bank of Israel (email: noam.zussman@boi.org.il). Lucas Davis was coeditor for this article. The authors are grateful to Daniel Felsenstein, David Genesove, Ed Glaeser, Larry Katz, Saul Lach, Danny Ben-Shachar, numerous researchers in the Bank of Israel Research Department, and many seminar and conference participants for helpful suggestions and conversations. We thank Ronit Geraffi from Amidar and Israel’s National Insurance Institute (NII) for granting us access to confidential data, with special thanks to the Deputy Director General for Research, Daniel Gottlieb. Thanks to Michaela Gerson and Nadav Lachman Lazare from the Ministry of Housing. We thank Dotan Persitz for graciously sharing data on elections. This research was supported by Israel Science Foundation grant no. 2118/17. Bridge funding before the receipt of the ISF grant was provided by the Eshkol Center. All results have been reviewed to ensure that no confidential information is disclosed. Any views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Israel. Correspondence: naomi.hausman@mail.huji.ac.il.

Publisher Copyright:
© 2022. All Rights Reserved.


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