Does housing policy impact income sorting near urban amenities? Evidence from Vienna, Austria

Abstract

AbstractLocal amenities capitalize into housing values and form the foundation for income and preference-based sorting of residents into communities. Ellickson’s single-crossing property establishes how household sorting leads to correlation between income and preferences for amenities. For amenities including urban green, metro stations and centrality, income-based sorting describes the process by which higher-income residents choose to locate in close proximity to higher levels of amenities. Using Vienna as an example, we empirically investigate the role housing policies have on this expected pattern of sorting. We find that the provision of municipality housing and capped rents reduces income gradients between block groups adjacent to amenities and those further away while we do not find a significant effect associated with limited-profit housing. For policymakers, this suggests that policy design plays a critical role in ensuring availability of local amenities across income groups while simultaneously confirming the single-crossing result holds despite the existence of significant market regulations.