1960-2000; Calderon and Serven (2008) show that growth is positively affected by the stock of infrastructure assets, and income inequality declines with higher infrastructure quantity and quality.

# **2.3. Housing finance, economic growth and reduction of inequality**

Studies suggest that housing investment has an impact on economic growth (especially short-run growth) and employment. For example, Hongyu et al. (2002) find that compared to non-housing investment, housing investment has a stronger short-run effect on economic growth. They also find that housing investment has a long-run impact on economic growth but not on non-housing investment. Chen and Zhu (2008) find that the relationship between housing investment and economic growth in China is different depending on which provinces are analyzed. Moreover, Erbas and Nothaft (2002) find that low-income housing has a lower import component in production and higher labor intensity. This implies that construction of low-income housing will lead to greater employment and growth than the construction of middle- or high-income housing. Tipple (1994), by verifying the links between employment and housing development, shows that investment in shelter is very effective for promoting employment, especially among lower-income groups. Some of the benefits to the economy tend to be inversely proportional to housing costs, meaning that lowcost housing is more beneficial to the economy.

In addition, with respect to the empirical analysis of the relationship between housing and economic growth, there are some estimates of multiplier effects associated with construction in developing countries. For example, Uy (2006) notes that for every 1 peso spent on housing activities in the Philippines, an additional 16.61 pesos is contributed to national GDP.

Meanwhile, housing finance has the potential to increase investment in education, hence reducing the vulnerability of the poor; it could also contribute to financial deepening and inclusion. This improvement of financial deepening is critical for poverty reduction in SSA.

_Housing finance could increase investment in education and reduce vulnerability for the poor._ Becker (1975) and Atkinson (1975) studied the link between investment in human capital and wealth distribution. An implication of these models is that income inequality will decrease as access to finance improves and that housing improves homeowner’s borrowing capacity. They also suggest that housing finance could lead to more investment in human capital. To the extent that improved housing affordability benefits the poor, housing finance may improve education opportunities for the poor. Jacoby (1994) finds that lack of access to credit perpetuates poverty in Peru because poor households cannot afford to provide their children with appropriate education. Jacoby and Skoufias (1997) find that without access to finance, income shocks cause poor families to discontinue schooling for children; housing provides an asset that can be used to smooth income shocks.

_A more inclusive housing financial system can improve access to housing finance for poor and low-tomoderate-income households_ . Consistent with this view, Malpezzi (1999) suggests shifting from a housing finance perspective—where special circuits are used to mobilize short-term household deposits for longterm mortgages—to a perspective where housing finance is integrated with broader capital markets. Singh and Huang (2011) analyze data from Africa between 1992 and 2006 and find that financial deepening (as measured in part by credit to the private sector as a percent of GDP) is associated with less poverty and reduced income disparities in African countries, and that this is most important in the early stages of financial development. Stronger property rights strengthen this relationship. Beck, Demirguc-Kunt, and 5