Publicly Disclosing Vulnerable Neighborhoods, The Costs and Consequences - Evidence from the Big City Areas of Sweden

Abstract

In recent years, the police’s listing of “vulnerable neighborhoods” in Sweden has become a highly debated topic. Intense attention has been directed toward such areas, and the social consequences of the lists have been highly debated. However, research on the economic impact of the listing practice has been given less interest. Using the difference-in-difference method, together with the introduction of the police’s list of vulnerable areas, we provide causal effects of the public disclosure on (1) housing prices, (2) the risk of residents moving out of a neighborhood, and (3) net income. Our results show that listing an area as vulnerable has a negative effect on housing prices and net income. We find no significant effect on the risk of residents moving out of neighborhoods listed as vulnerable. The impact on housing prices is negative, immediate and lasting, with a stronger impact in higher treatment intensity areas.