Better Neighborhoods or Better Houses? The Effects of Housing Policies on Poor Households in Brazil

Abstract

This paper evaluates the effects of a housing program that built houses for low-income families from the city of Rio de Janeiro (Brazil). We explore the lotteries used to select the program’s beneficiaries to provide evidence of its effects on location, housing quality, housing costs, and household choices. The program induced households to move to less populated, more impoverished, and more distant neighborhoods. However, it increased the houses’ quality in which these households lived and decreased their housing costs. Increases in other expenditures did not compensate for the decline in housing costs. Furthermore, we find the program did not influence labor force participation and income and weakly increased teenagers’ enrollment. Overall, our evidence contributes to understanding the mechanisms through which housing programs affect well-being.