Housing Finance Reform and Increasing Socioeconomic Segregation in Mexico

Abstract

Changing patterns of urban growth in Latin America have drawn scholars' attention to new forms of socioeconomic segregation. In Mexico, changes in urban development are different from, and perhaps more significant than, elsewhere in the region as they stem principally from the reform and expansion of the country's provident‐fund‐dominated housing finance system. This article examines the impact of the expansion of housing finance on socioeconomic segregation with a series of econometric models, using a unique combination of data on over 100 Mexican cities. Findings show that growth in segregation during the 1990s is strongly associated with the share of new housing purchased under the financing system, as is the change in the share of socioeconomic segregation conditional on the distribution of housing stock. The results highlight a previously unrecognized secondary impact of the new policy, and illustrate the importance of the structure of the housing finance system in the way cities are built and where people live within them. Résumé Les modèles de croissance urbaine en Amérique latine ont évolué, attirant l'attention des chercheurs sur de nouvelles formes de ségrégation socio‐économique. Au Mexique, les changements que présente le développement urbain sont spécifiques, et peut‐être plus significatifs qu'ailleurs, car ils découlent principalement de la réforme et de l'essor du système national de financement des logements dominé par les fonds de prévoyance. Pour examiner comment la progression de ce financement affecte la ségrégation socio‐économique, l'étude utilise plusieurs modèles économétriques appliqués à une combinaison unique de données couvrant plus de cent villes mexicaines. La part des nouveaux logements achetés selon ce système de financement apparait comme un facteur déterminant dans l'accentuation de la ségrégation au cours des années 1990 et dans la proportion de la ségrégation socio‐économique générée par la répartition du parc de logements. Les résultats mettent en avant une conséquence secondaire (négligée jusqu'ici) de la nouvelle politique et illustre combien la structure de financement des logements pèse sur la façon dont les villes sont construites et sur le lieu d'habitation des populations dans ces villes.

Economic segregation in transition China: evidence from the 20 largest cities

“…First, the trends conform with patterns documented for the United States (Monkkonen & Zhang, 2014;Reardon & Bischoff, 2011), where segregation levels consistently increase with population size and level of economic development, and Mexico and Brazil, where the size of cities is a more important factor than level of economic development (Monkkonen, 2012;Telles, 1995). In Brazil, the relationship between economic development and economic segregation is negative, consistent with China's pattern.…”

“…We find that Chinese cities are highly segregated along socioeconomic lines, though further work should be undertaken to make the comparison more systematic. Similar to cities in the United States (Mills & Hamilton, 1994), Mexico (Monkkonen, 2012), and Brazil (Telles, 1995), we find a positive correlation between overall segregation levels, city population size, and level of economic development, though the relationship in China is very weak and tentative. We also find support for the idea that larger cities in these countries are more segregated because more competitive land markets lead to greater neighborhood differentiation.…”

“…Based on a review of literature from the United States, Latin America, and Europe, Monkkonen (2012) identifies four main categories of factors affecting levels of segregation: economic (conventionally, in the form of inequality), urban growth, land use, and housing market characteristics. We distill this conceptual framework to three sets of related explanations for the transformation of Chinese cities: rapid urbanization, rural-urban migration, and the privatization of the housing system.…”

Has Mexico City’s shift to commercially produced housing increased car ownership and car use?

“…Between 1995 and 2005, public agencies provided 75 percent of all housing loans by value-and even more by volume-in Mexico. Infonavit accounted for 81 percent of these publicly financed loans (Monkkonen 2011b). Smaller but similar housing funds for low-income workers with informal employment, government workers, and the stateowned oil company (Pemex) also contributed to the increase in commercial housing production.…”

“…Located almost 20 miles to the northeast of the historic center, Los Héroes, despite its somewhat unusual appearance from the air, is typical of contemporary housing developments in Mexico City on the ground. Over the past two decades, Mexico City's principal form of new housing production has shifted from an informal process, where households built their own properties generally in informal settlements on the periphery, to a formal process, where private developers acquire large peripheral lots, build new housing speculatively, and sell completed homes in massive developments to households that qualify for publicly subsidized mortgages (Monkkonen 2011a, 2011b, Pardo and Velasco Sánchez 2006. What look like thick gray lines from the air are rows of identical one-, two-, and three-story attached houses and condominiums along intersecting rectangular grids of arterial roads and linear culs-de-sac.…”