Private Provision of Local Public Goods and Housing Market Responses: Evidence from London (with Stefano Cellini) [Link] R&R at Regional Science and Urban Economics
Media: LSE Business Review, Institute of Directors
Abstract: Business Improvement Districts (BIDs) represent an important place-management tool across the UK, investing more than 100 million pounds each year into street safety and other public goods provision for their local neighborhoods. This paper studies the effects of the opening of a BID on local housing markets in London, where the first BIDs started operating in 2005 and more than 20% of the active BIDs in the country are located. We show that BID openings lead to an increase in house prices by around 3%, using property transaction data and BID-level information. We argue that these results are driven by demand effects from neighborhood improvements, since they seem to be driven by BIDs spending more, especially on crime. We rule out housing supply responses to BID openings using administrative records on housing planning applications. In the longer run, blocks exposed to BIDs activity present lower growth in share of renters, BAME and, to a lesser extent, unemployed residents compared to non-exposed blocks.
Short-term Rentals and Housing Market: Evidence from Portuguese Metropolitan Areas (with Diogo Jardim Gonçalves and Ronize Cruz) [Link]. R&R at Portuguese Economic Journal
Media: Population News, Portuguese Economy Research Report
Abstract: In this paper, we make use of the rapid expansion of short-term rentals in Portugal, based on a policy change in 2014, to estimate the effects on house prices. Using a novel dataset consisting of property transaction data, from 2010 to 2017, for the metropolitan areas of Lisbon and Porto, we causally identify the impact of these reforms through a two-way fixed effects model, at the quarterly level, where we control for property-specific characteristics and location and time fixed effects. The evidence suggests that a one-unit increment in the number of local lodging establishments results in a 0.17% increase in the value of transaction, which is ensured by a set of robustness exercises. Stronger effects are found for properties with four or more bedrooms, owned by citizens outside of the European Union, in the municipality of Porto and at the upper quantiles. We also document a decrease in the number of transactions of new buildings and a positive effect on the value of commercial properties.
The Economic Footprint of Short-Term Rentals on local businesses: Evidence from Portugal (with João Pereira dos Santos and Ronize Cruz) [Link]. R&R at Journal of Economic Geography
Abstract: This paper examines the rapid rise of short-term rentals (STRs) in Portugal and their impact on the performance of local businesses. Using comprehensive firm-level data covering all private companies, we find that exposure to STRs increases the probability of business closure, particularly for low-performing firms. For surviving incumbent firms, we estimate a significant rise in sales for both resident-and tourist-oriented businesses, along with increases in employment, wage bill, and liquidity for the latter. In civil parishes with greater STR exposure, we observe a higher probability of new firm entry, reshaping the urban business landscape, with newly established firms experiencing higher turnover than those that close.
Media: LSE Business Review, Nada es Gratis, Portuguese Economy Research Report, Sutherland Business Index, Population News, Portugal Business News, El Economicista, Público, Executive Digest, Idealista, The Portugal News, Link to Leaders