Study Overview
We study the effects of the two most common slum policy interventions: in-situ upgrading and population relocation on (i) slum area physical characteristics, (ii) socioeconomic attributes of slum dwellers, and (iii) spillovers to nearby formal neighborhoods. To conduct our analysis we create a 20+ year novel panel dataset for the universe of slums in Chile using satellite images, census data, administrative records, construction permits, crime reports, and property tax records. Descriptively, slums tend to form on the periphery of cities, close to low-skilled labor centers. City level slum growth is linked to higher housing rental prices and improved labor markets for low-skilled workers.
Study Results
We find that both in-situ upgrading and slum relocation reduce a slum’s building footprint and the share land used for residences. However, in-situ upgrading generates long-lasting positive impacts on housing quality in slum areas and attracts higher SES (socioeconomic status) residents. In terms of spillovers to surrounding neighborhoods, in-situ upgrading dominates population relocation. Neighborhoods near in-situ upgraded slums experience a reduction in criminal activity, more housing investment, and attraction of more high SES residents. These findings are all the more impressive given that the average fiscal cost per beneficiary household for in-situ upgrading is only two-thirds of the cost of population relocation.
Research Partner: Universidad de Chile
Populations: low income households
IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)