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The Price of Inclusion: Evidence from Housing Developer Behavior

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  • Evan J. Soltas

    (MIT Economics)

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.”

Suggested Citation

  • Evan J. Soltas, 2024. "The Price of Inclusion: Evidence from Housing Developer Behavior," The Review of Economics and Statistics, MIT Press, vol. 106(6), pages 1588-1606, November.
    • Handle: RePEc:tpr:restat:v:106:y:2024:i:6:p:1588-1606
    DOI: 10.1162/rest_a_01231
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