On the economic impacts of constraining second home investments

Hilber, Christian A. L. ORCID: 0000-0002-1352-495X and Schöni, Olivier (2020) On the economic impacts of constraining second home investments. Journal of Urban Economics, 118. ISSN 0094-1190

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Abstract

We investigate how political backlash against wealthy second home investors in high natural amenity places affects local residents. We exploit a quasi-natural experiment: the ‘Swiss Second Home Initiative’, which banned the construction of new second homes in desirable seasonal tourist locations. Consistent with our model, we find that the ban substantially lowered (increased) the price growth of primary (second) homes and increased the unemployment growth rate in the affected areas. Our findings suggest that the negative effect on local economies dominated the positive amenity-preservation effect. We conclude that constraining second home construction in seasonal tourist locations where primary and second homes are not close substitutes may reinforce wealth inequality.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/journal-of-u...
Additional Information:	© 2020 Elsevier Inc
Divisions:	Geography & Environment
Subjects:	H Social Sciences > HD Industries. Land use. Labor
JEL classification:	D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement G - Financial Economics > G1 - General Financial Markets > G12 - Asset Pricing; Trading volume; Bond Interest Rates R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R21 - Housing Demand R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R31 - Housing Supply and Markets R - Urban, Rural, and Regional Economics > R5 - Regional Government Analysis > R52 - Land Use and Other Regulations
Date Deposited:	03 Jun 2020 09:42
Last Modified:	25 Oct 2024 19:33
URI:	http://eprints.lse.ac.uk/id/eprint/104697

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