The external effects of public housing developments on informal housing: the case of Medellín, Colombia

Provision of new subsidized housing projects has proven to be an effective alternative to reduce the high level of quantitative housing deficit in developing countries. However less is known about how these housing projects affect the quality of the surrounding habitat, especially when projects are located in areas with high levels of precarious housing. Using highly granular public information from Medellin, Colombia, we estimate the causal effect of new social housing projects (VIS) on housing quality indicators in the neighborhood. To estimate this causal effect, we use the geological quality of the land as an instrumental variable for a measure of exposition to new social housing projects. Our results show that new VIS projects lead to a reduction of informal housing, poverty, and crime in the neighborhood.