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Housing policy in developing countries. The importance of the informal economy

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  • Richard Arnott

    (Department of Economics, University of California Riverside)

Abstract

All countries have a formal economy and an informal economy. But, on average, in developing countries the relative size of the informal sector is considerably larger than in developed countries. This paper argues that this has important implications for housing policy in developing countries. That most poor households derive their income from informal employment effectively precludes income-contingent transfers as a method of redistribution. Also, holding fixed real economic activity, the larger is the relative size of the informal sector, the lower is fiscal capacity, and the more distortionary is government provision of a given level of goods and services, which restricts the desirable scale and scope of government policy. For the same reasons, housing policies that have proven successful in developed countries may not be successful when employed in developing countries.

Suggested Citation

  • Richard Arnott, 2008. "Housing policy in developing countries. The importance of the informal economy," Working Papers 200801, University of California at Riverside, Department of Economics, revised Jan 2008.
    • Handle: RePEc:ucr:wpaper:200801
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    References listed on IDEAS

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    Cited by:

    1. Hasan, Zubair, 2010. ""Islamic house financing:current models and a proposal from social perspective," MPRA Paper 31638, University Library of Munich, Germany, revised 02 Apr 2011.
    2. Ashley Gunter & Kenneth Manuel, 2016. "A role for housing in development: Using housing as a catalyst for development in South Africa," Local Economy, London South Bank University, vol. 31(1-2), pages 312-321, February.
    3. Raquel Lourenço Carvalhal Monteiro & Valdecy Pereira & Helder Gomes Costa, 2019. "Analysis of the Better Life Index Trough a Cluster Algorithm," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(2), pages 477-506, April.
    4. Jose Rosero, 2012. "The ABC of Housing Strategies: Are Housing Assistance Programs Effective in Enhancing Children's Well Being?," Tinbergen Institute Discussion Papers 12-074/3, Tinbergen Institute.
    5. Dewita, Yulia & Yen, Barbara T.H. & Burke, Matthew, 2018. "The effect of transport cost on housing affordability: Experiences from the Bandung Metropolitan Area, Indonesia," Land Use Policy, Elsevier, vol. 79(C), pages 507-519.
    6. Eric Heikkila & Michael Lin, 2014. "An integrated model of formal and informal housing sectors," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 121-140, January.
    7. Valerii O. Omelchuk, 2018. "Effectiveness of the Housing Policy: A Comparative Analysis," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 383-392.
    8. Doaa Abouelmagd & Christian Kesteloot & Eric Corijn, 2013. "Housing Projects for Low-Income Groups and Modes of Economic Integration: A Comparative Study in Greater Cairo," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 104(4), pages 456-477, September.

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