This dissertation studies what are the determinants of slum growth and what are the effects of slum policies in the context of Brazil between 1991 and 2010. Chapter 1 estimates a model of cities with slums and performs a set of quantitative counterfactual exercises in order to assess those two questions. In the model, households choose where to live between two types of houses in a set of cities or the countryside and housing supply functions for each type of house in each city define how housing rents react to housing demand shocks. Instrumental variable estimates of the model’s structural parameters show that low income households' migration decisions are very elastic with respect to urban wages and that the supply of slum houses is more elastic than the supply of non-slum houses. The estimated model then explains why we observe slum growth when a few cities experience rapid economic growth leading to higher wages: the supply of non-slum houses reacts slowly when low income households move rapidly into cities. A different story takes place when wage growth takes place in all cities. When this happens, households’ incomes improve nation-wide, and this reduces national slum incidence as higher incomes allow households to afford higher quality housing. In terms of common slum policies, I show that when all cities enact a slum repression policy resulting in a 20% increase in unserviced housing costs, urbanization decreases by 0.4 percentual points and low income households' welfare declines by 1%. Chapter 2 studies the political and institutional drivers of slum growth. A regression discontinuity design in close mayoral elections shows that when a mayor of a center-left, pro-poor party wins an election, she implements more slum upgrading policies and causes more slum expansion in the municipality. These findings complement those in Chapter 1 by providing plausible causal evidence of the incentive effects of local policies on households’ residential decisions.
Alves, Guillermo,
"Slum Growth in Brazilian Cities"
(2017).
Economics Theses and Dissertations.
Brown Digital Repository. Brown University Library.
https://doi.org/10.7301/Z0QZ28DP
