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Location of the Poor: Neighborhood Versus Household Characteristics: The Case of Bogotá

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Name of the Asset | Location of the Poor: Neighborhood Versus Household Characteristics: The Case of Bogotá
Type of Asset | Working Paper
Date | July 2013

Summary

The poor in Latin American cities live in the peripheries, while affluent classes cluster in neighborhoods closer to the centers of economic activity. This paper examines the behavioral drivers of location-decisions made by citizens, to attempt a definition of segregation without debating ethics.

The paper decomposes the income differential of a group living at the urban periphery of Bogotá compared to its peer group that lives in the inner city. Socio-demographic characteristics are assumed to make up a Mincerian income profile, where the structure of income generation depends on location. The method, the Oaxaca-Blinder mean decomposition, was applied by splitting the sample by location and, subsequently comparing returns between groups.

Results show that segregation, as opposed to individual characteristics, explains one fourth to one-third of the mean income difference between locations in Bogotá, Colombia. Further estimations show that access has a major role in explaining the impact of location, while housing and neighborhood characteristics play a relatively minor role. As such, results question the emphasis that local social policies lay on improving spaces, while they could have a greater impact on welfare conditions by giving more relevance to the portable assets of the poor.

Authors | Juliana Aguilar and Tito Yepes, Fedesarrollo, Colombia
Country and/or Region | Colombia
Name of the Program | Urbanization and Development: Delving Deeper into the Nexus
Funder(s) |  Institutional Capacity Strengthening Fund (ICSF) of the Inter-American Development Bank (IDB), as part of the IDB Initiative on Strengthening Policy Links between Latin America and Asia, and thanks to the contribution of the Government of the People’s Republic of China

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