Do Place-Based Tax Incentives Expand Housing Supply? Evidence from  France

This paper estimates the causal impact of the French Pinel program—a geographically targeted demand-side tax incentive—on local housing market dynamics. Exploiting the spatial discontinuity in program eligibility and the staggered reclassification of municipalities, we implement a spatial difference-in-differences event-study design using high-resolution administrative data on real-estate transactions and building permits. The results show no statistically significant increase in new housing construction within treated areas. Instead, the policy induced a geographic reallocation of investment from non-eligible municipalities toward nearby eligible zones, together with a persistent shift in the composition of new housing toward smaller units. We also document a lasting rise in vacant-unit sales after the program’s expiration, suggesting speculative behavior and limited rental absorption in affected markets. Overall, the findings indicate that spatially targeted tax incentives can reshape the geographic and typological structure of housing investment without expanding aggregate supply. These results highlight the limits of demand-side subsidies in markets with low supply elasticity and the need to design policies that better integrate fiscal incentives with land-use constraints and local regulatory conditions. JEL Codes: R38; R58; H24; C23.