We investigate how political backlash against wealthy second home investors in high natural amenity places affects local residents. We exploit a quasi-natural experiment: the 'Swiss Second Home Initiative', which banned the construction of new second homes in desirable seasonal tourist locations. Consistent with our model, we find that the ban substantially lowered (increased) the price growth of primary (second) homes and increased the unemployment growth rate in the affected areas. Our findings suggest that the negative effect on local economies dominated the positive amenity-preservation effect. We conclude that constraining second home construction in seasonal tourist locations where primary and second homes are not close substitutes may reinforce wealth inequality.

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1 July 2020

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Journal of Urban Economics 1182020

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DOI: 10.1016/j.jue.2020.103266

https://www.sciencedirect.com/science/article/pii/S0094119020300371

This Journal article is published under the centre's Urban programme.