There Is No Free House

Abstract

This paper estimates the effect of a housing relocation program on the labor supply and living conditions of low-income households across major cities in South Africa. Using panel microdata collected between 2008 and 2014, it exploits the arbitrary eligibility rules of the policy with a fuzzy regression discontinuity design to obtain reduced form estimates. There are three main findings. First, in the short-term of 2 to 4 years following relocation, the labor supply of recipient households decreases, driven mostly by a reduction of female hours. Second, the large increase in distance (km) to economic opportunities seems to be an important factor behind the decline, directly or indirectly through family shifts in earning strategies. Finally, evidence is limited regarding improvements in housing and neighborhood quality. Overall, there is no clear indication that the net welfare effect of relocation is positive.