Can a shift of neighborhoods affect mental health? Evidence from a quasi-random allocation of applicants in the public social housing system

Mental health problems generate vast pecuniary and non-pecuniary costs for the individual, for relatives, and for society. Living in deprived neighborhoods has been shown to influence, among
other things, labor market outcomes and crime. Therefore, we explore how living in a deprived neighborhood with different characteristics influences the mental health of the residents. We utilize
a quasi-random allocation of applicants into different neighborhoods through the public social housing (PSH) office to estimate the effect on mental health of living in a deprived neighborhood.
The applicants entitled to PSH are lower-income residents with both an urgent housing problem and social problems. Our results suggest that being exposed to a deprived neighborhood as an adult has a significant negative impact on mental health among vulnerable men. We find that besides the usual characteristics of a deprived neighborhood—i.e., high shares of people without employment and with low income—the share of people with mental health problems is an important characteristic of the neighborhood that has a negative impact on mental health among men.

MPRA Paper No. 88929, posted 17 September 2018

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