Urban upgrading in Rio de Janeiro: Evidence from the Favela-Bairro programme

Abstract

This paper estimates average treatment effects and distributional and locational effects of the Favela-Bairro programme at the household level on direct outputs and on property values. Not surprisingly, households in treated neighbourhoods are better off in terms of the direct outputs delivered by the programme. However, in terms of property values, at the average level, the intervention was not translated on appreciation of housing values, suggesting that, without a land titling component, slum upgrading programmes do not have an effect on the value of dwellings. On the contrary, when estimating heterogeneous effects of the programme within treated neighbourhoods, the results suggest that appreciation of housing values is observed in properties with poor accessibility and low-value dwellings. These distributional and locational effects suggest that, although the average treatment effects on housing values are not significant, the programme was successful in decreasing inequality among slum dwellers, and reducing economic and spatial segregation within treated neighbourhoods.