Impact of property rights on poor households’ investment decisions : a treatment evaluation of a titling programme in Peru

This paper examines the impact of a Peruvian large-scale titling programme on housing investment in urban slums. This experience was previously analyzed by Field (2005), who concluded that the resulting investment is limited only to small housing renovations, with no considerable impact on long-run investments. Using a unique data set from 2003 that contains panel information on several categories of housing investment, this study finds not only a positive relationship with short-run investments, but also with long -run ones. Results from a difference-in-difference propensity score matching indicate that the estimated average treatment effect implies an increase in the number of housing sizeable additions by 170-200 percent. Additional contributions of this paper are threefold: first, in the case of long -run investment, as income reduces, the title’s impact tends to diminish, so that a significant effect obtains only for the top half of the distribution. These weaker results for poorer households suggest the existence of market failures, such as in the credit market. Second, results indicate that the title seems to be much more relevant in the decision as to whether to invest or not rather than in the level of investment. Third, the impact on long - run investment requires more than four years to be relevant