New Housing Supply and the Dilution of Social Capital

Research Papers in Environmental and Spatial Analysis No. 123

45 Pages Posted: 6 Sep 2007

See all articles by Christian A. L. Hilber

Christian A. L. Hilber

London School of Economics (LSE) - Department of Geography and Environment; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Spatial Economics Research Centre (SERC)

Date Written: August 2, 2007

Abstract

This paper examines the role of local housing market conditions for social capital accumulation and neighborhood club good provision. A model of individual investment decisions predicts that in a setting with high property transaction costs (i) homeowners are more likely to invest in social capital than renters and (ii) the positive link between homeownership and social capital is stronger in more built-up neighborhoods with inelastic supply of new housing. In these neighborhoods homeowners are largely protected from inflows of newcomers that would dilute the net benefit from social capital in the longer run. Empirical evidence from the Social Capital Community Benchmark Survey confirms the model predictions. Instrumental variable estimates suggest that the effects are causal.

Keywords: House price capitalization, social capital, homeownership, land and housing supply, neighborhood club goods

JEL Classification: D71, R21, R31

Suggested Citation

Hilber, Christian A. L., New Housing Supply and the Dilution of Social Capital (August 2, 2007). Research Papers in Environmental and Spatial Analysis No. 123, Available at SSRN: https://ssrn.com/abstract=1012328 or http://dx.doi.org/10.2139/ssrn.1012328

Christian A. L. Hilber (Contact Author)

London School of Economics (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Spatial Economics Research Centre (SERC) ( email )

United Kingdom

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