The Economic Effects of Slum Clearance and Urban Renewal in the United States

Abstract

The Housing Act of 1949 established a federally subsidized program that helped cities clear areas of existing buildings for redevelopment, rehabilitate deteriorating structures, complete comprehensive city plans, and enforce building codes. The program ended in 1974, but not before financing over 2,100 urban renewal projects and generating great controversy. We use an instrumental variable strategy to estimate the program’s effects on city-level outcomes. The estimates are generally positive and economically significant and are not driven by differential changes in cities’ demographic composition. We caution that the results do not imply that the program was an equitable or optimal approach to dealing with central-city problems.