Moving to opportunity or isolation? network effects of a slum relocation program in India

Abstract

A housing lottery in a large Indian city provided 110 out of 497 participants the opportunity to move out of a slum and into improved housing on the city's periphery. Fourteen years after housing assignment, relative to lottery losers, winners report better housing conditions farther from the city center, but no change in family income or human capital. Winners also state increased isolation from family and caste networks and lower access to informal insurance. In particular, they are significantly less likely to know someone they can rely on for borrowing needs and report fewer informal transfers in the event of shocks. We also observe significantly program exit: 34% of winners never even moved into the assigned housing and 32% eventually exited the colony to be closer to family and the city center. Our results suggest that the benefits of improved suburban housing were o set by its drawbacks in the form of destruction of social capital, pointing to the importance of considering social networks when designing housing programs for the poor