THE IMPACT OF HOUSE TITLING: Evidence from a natural experiment in Uruguay
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Transcript of THE IMPACT OF HOUSE TITLING: Evidence from a natural experiment in Uruguay
THE IMPACT OF HOUSE TITLING: Evidence from a natural experiment in Uruguay
Néstor Gandelman Universidad ORT Uruguay
First Discussion Seminar
Titling in Latin America: Effects and Channels
March 30, 2007
Problems
• This is a very preliminary draft.
• There are at least 3 issues were I need feedback from you:
1 . Which should the focus of the paper be?2 . Which are the “better” comparisons?3 . How far to go with the controls?
The Natural Experiment
•In the mid-70s a public institution (INVE) built 13 small neighborhoods (communities).
– In all cases purchase agreements were signed and implicit mortgage contracts were in place.
•The communities were built in land owned by:– INVE (9) – Municipality (3) – Unknown (1)
The Natural Experiment
•In 1977 the INVE was eliminated by law and its goals and property were assigned to the state-owned mortgage bank, (BHU).
– Over the following decade various institutions were officially in charge of their management.
•Finally, on March 1987 the Municipality rejected the last agreement and informed the BHU that it should take care of the communities built in its land.
The Natural Experiment
•In December 1987, the Executive branch of Government designed a task group to study the situation of the communities with representatives of:
– the Ministry of Education, – the Ministry of Labor and Social Security, – the BHU and – the Municipality of Montevideo.
The Natural Experiment
•The conclusions of this task group were:– No institution was really taking care of the
management of the communities.
– It would imply an excessive cost for the BHU to assume it.
– It was in the best interest of the BHU to sell the houses to the actual occupants in whatever price they were able to pay.
The Natural Experiment
•The board of the BHU agreed and
– Set a nominal price of 10U.R. equivalent to approximately $100 for those occupants that could not prove to have made any previous payment.
– Those that made previous payments only had to pay for the titling costs (2U.R approximately $20).
The Natural Experiment
•But the assignment of the formal property rights could be done only in 3 communities.
•Why?
– Because in the others there were no registered plans (area maps with the land division among houses) in the Municipality of Montevideo.
Table 1. Data from the task force report
Name Number
houses
Original owner of the land Area
maps
19 de Abril 98 INVE-BHU No
Ituzaingó 60 Unknown No
Independencia 98 INVE-BHU No
18 de Julio 34 INVE-BHU Yes
Sarandí 130 INVE-BHU No
Rincón 52 INVE-BHU No
Grito de Asencio 65 INVE-BHU No
25 de Agosto 52 INVE-BHU Yes
Las Piedras 36 Municipality of Montevideo No
Misiones 540 Municipality of Montevideo No
Lavalleja 84 INVE-BHU Yes
Guayabos 150 INVE-BHU No
19 de Junio 456 Municipality of Montevideo No
The Control Communities
Table 2. Controls
Contiguous Non-Contiguous
19 de Abril
Sarandí
Rincón
Same owner as treatment
(BHU)
Independencia (18 de Julio)
Guayabos
Grito de Ascencio
Ituzaingó
Misiones
Different owner (BHU)
Las Piedras (25 de Agosto)
19 de Junio
Census Sample(1/3) Nothing
The survey• Census of the 3 treatments:
18 de Julio - (34)25 de Agosto - (52)
Lavalleja - (84)Total: 170
• Census of 2 controls:Independencia (98) Las Piedras (36)Total: 134
Total 469 houses to be surveyed
• Sample 1/3 of 5 controls19 de Abril (98)Sarandí (130)Rincón (52)Guayabos (150)Grito de Ascencio (65)Total:495 Sample:165
The survey• Census of 3 treatments:
– (done almost no rejection)
• Census of 2 control:– (done almost no rejection)
• Sample of 4 controls:– 1/3 of community size with no “house” replacement in case of
rejection or not finding anybody.
– (80% done)
Comparisons• Exercise 1- Independencia vs 18 de Julio
– (contiguous, same owner, census data)
• Exercise 2 - Las Piedras vs 25 de Agosto– (contiguous, different owner, census data)
• Exercise 3 – All treatments vs 4 controls – (non-contiguous, same owner, sample-census data)
• Exercise 4 – All treatments vs All controls
• Exercise 5 – Treatment and Controls vs Household survey data (city or neighborhood)
The survey
• The survey covers:• basic socio-demographic data• housing conditions• entrepreneurship• credit• happiness• external appearance • health• education• work• income
Table 5. Housing Tenure
First exercise Second exercise Third exercise
Independencia 18Julio LasPied 25Agosto
Control Treatm Control Treatment Con Treatm Tot
Assigned by Public Institution 35% 43% 54% 46% 41% 50% 46%
Inherited (from someone assigned) 7% 9% 5% 41% 7% 15% 11%
Bought the house 41% 34% 13% 2% 33% 25% 29%
With Notary participation 5% 9% 10% 2% 7% 15% 11%
Without notary participation 36% 26% 0% 0% 28% 10% 18%
Rent 0% 3% 0% 2% 0% 3% 1%
Occupant with permission 16% 9% 28% 7% 20% 7% 13%
Occupant without permission 0% 3% 0% 0% 0% 1% 0%
Total 100% 100% 100% 100% 100 100% 100
Houses with these problems Houses with these devices
Humidity in the roof Water heater
Leaks Instant water heater
Wall Fissures Refrigerator
Problems in doors or windows TV
Floor Fissures Cable TV
Problems with wall or roof plaster Video
Problems with the ceiling Washing machine
Lack natural light Dishwasher
Lack ventilation Microwave Oven
Floods when rains PC
Risk of collapse Motorcycle
Humidity in the foundation Automobile
Home investment
• The type of effects we are
looking are investments
which may suffer a hold up
problem vs investments that
can be taken if they have to
move.
Entrepreneurship and Credit
• Households in the treatment communities have more access to formal credit than the control communities.
– But ownership documents were not a relevant requisite to access to credit.
– Thus, the channel does not seem to be through the transformation of houses into colletaralized capital.
Entrepreneurship and Credit
• We find that there are more productive activities in the control communities.
– And there is no participation of the formal credit system in the funding of any of them (control + treatment).
– Moreover the larger access to formal credit from the treatment communities does not pass through to productive activities.
Health
• Is there a channel from
housing living
conditions (home
investment) to health
outcomes?
Diseases related to housing conditions
Asthma
Tuberculosis
Sinusitis
Rheumatism
Intestine parasites
Allergies
Skin infections
Diseases not or less related to housing conditions
High blood pressure
Diabetes (insulin-dependent)
Diabetes (insulin-dependent)
Psychic disorders
Sexual transmission illnesses
Discapacities
Other illnesses