Volume 14, Issue 55 (Summer 2026)
IUESA 2026, 14(55): 39-57 |
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tajrishy S, Vesal M. The Crowding-Out Effect of the Mehr Housing Project on Private Construction in Iran. IUESA 2026; 14 (55) :39-57
URL: http://iueam.ir/article-1-2236-en.html
URL: http://iueam.ir/article-1-2236-en.html
1- Sharif University of Technology , s.tajrishy@sharif.edu
2- Sharif University of Technology
2- Sharif University of Technology
Abstract: (17 Views)
The Mehr Housing Project was launched in 2007 with the goal of improving housing affordability for low-income households and expanding housing supply through the allocation of public land and subsidized loans. However, large-scale government interventions can either complement private sector activities or crowd them out. This study investigates whether the implementation of the Mehr Housing Project increased the net housing stock in Iran or primarily substituted private construction.
To answer this question, we use a semiannual county-level panel dataset covering the period 2005–2021. The data include building permits and housing starts in both the public (Mehr Housing) and private sectors, collected from official sources. The empirical strategy applies a generalized difference-in-differences approach that controls for county and time fixed effects as well as province-by-year interactions, allowing for causal identification of the government’s intervention effect. The quasi-exogeneity of project allocation—driven by access to public land—further strengthens identification.
The results indicate that for every 100 Mehr Housing units constructed, only about 55 units were added to the net housing stock, while the remaining 45 units substituted private construction. Similar results are found for the number of projects, suggesting that although the Mehr Housing Project expanded housing supply, it substantially crowded out private sector capacity.
To answer this question, we use a semiannual county-level panel dataset covering the period 2005–2021. The data include building permits and housing starts in both the public (Mehr Housing) and private sectors, collected from official sources. The empirical strategy applies a generalized difference-in-differences approach that controls for county and time fixed effects as well as province-by-year interactions, allowing for causal identification of the government’s intervention effect. The quasi-exogeneity of project allocation—driven by access to public land—further strengthens identification.
The results indicate that for every 100 Mehr Housing units constructed, only about 55 units were added to the net housing stock, while the remaining 45 units substituted private construction. Similar results are found for the number of projects, suggesting that although the Mehr Housing Project expanded housing supply, it substantially crowded out private sector capacity.
Keywords: Crowding-out effect, Housing market, Government intervention, Public housing, Mehr Housing Project
Type of Study: Applicable |
Subject:
Special
Received: 2025/10/27 | Accepted: 2026/06/22 | Published: 2026/06/22 | ePublished: 2026/06/22
Received: 2025/10/27 | Accepted: 2026/06/22 | Published: 2026/06/22 | ePublished: 2026/06/22
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