Abstract
In this paper, we exploit the plausibly exogenous random relocation of slum dwellers in Pune, India to evaluate whether the provision of a formal title is capitalized into property values. Using propensity score matching methods, which address important sources of bias that are present in conventional Ordinary Least Squares (OLS) hedonic methods, we find no effect of titling. Our results suggest that slum improvements may be sufficient to enhance informal tenure rights and that formalizing those rights with a title has little additional impact. An analysis of heterogeneous treatment effects from titling confirms this conclusion, providing preliminary evidence when titling may complement or substitute for other slum interventions.
Highlights
A third of the world’s urban population live in slums (UN, 2003)
Exploiting a quasi-experimental design where titling is exogenously assigned, this paper has examined the implications of titling on the property values of slum dwellers in Pune, India
Using a conventional Ordinary Least Squares (OLS) hedonic estimator, we find a statistically significant effect from titling on housing values of 20.2 percent of the estimated monthly rental value of a housing unit—an effect comparable to that found elsewhere in the literature
Summary
A third of the world’s urban population live in slums (UN, 2003). Located 125 miles east of Mumbai in India’s Maharashtra state, Pune is representative of this global trend with nearly one million slum dwellers residing in a city of 3.1 million (ORGCC, 2011). Using survey data on slums from the World Bank’s Pune Household Survey in which titling is plausibly exogenously assigned following random resettlement, when using an ordinary least squares (OLS) hedonic estimator we find a statistically significant effect from titling on owner occupied housing values of 20.2 percent of the estimated monthly rental value. This is near the lower bound estimate previously identified in the literature for owner occupied housing units. Slum dwellers in Pune have limited access to credit markets and possess strong informal tenure rights and so the provision of a formal title has little additional impact on welfare as capitalized into property values.
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