How European Big Cities and Legal Systems Trigger Urban Inequality: An Inquiry into Law and Economics

Project Information

HABITAT

Grant agreement ID: 101076616

DOI

10.3030/101076616

EC signature date 19 January 2023

Start date 1 July 2023

End date 30 June 2028

Funded under

• European Research Council (ERC)

Total cost

€ 1 497 340,00

EU contribution

€ 1 497 340,00

Coordinated by

UNIVERSITA DEGLI STUDI DI GENOVA
Italy

Periodic Reporting for period 1 - HABITAT (How European Big Cities and Legal Systems Trigger Urban Inequality: An Inquiry into Law and Economics)

Reporting period: 2023-07-01 to 2025-12-31

Summary of the context and overall objectives of the project

The HABITAT project investigates how legal frameworks governing urban spaces—especially housing, credit, and property—contribute to socio-economic inequality in European cities. The core hypothesis is that structural features of legal systems (e.g. privatisation, planning policies, rent regulation, access to credit) can reproduce exclusion and benefit capital accumulation for the wealthiest. The project combines law, economics, and data science to offer a new empirical basis for understanding urban marginalisation, focusing on four cities (Berlin, Milan, Paris, London) and four main objectives:

O1 proposes a new historical periodisation of urban legal changes since the 1980s;
O2 compares housing and mortgage regulation across legal systems;
O3 develops statistical models to test the causal impact of legal reforms;
O4 builds a general theory of urban law and inequality, bridging doctrinal, economic, and network approaches.

Methodologically, HABITAT introduces a novel blend of doctrinal legal analysis, econometric models (DiD, IV, fixed effects), natural language processing (sentiment and topic modelling), and network science. The team includes legal scholars, economists, and data scientists working jointly to construct high-quality datasets and deploy reproducible methods.

The project contributes to the emerging field of the economics of urban law and aims to produce not only academic publications but also tools for policy analysis, including a set of taxonomies and dashboards on urban case law, legal frameworks, and regulatory outcomes.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

In its first phase, the project has developed several original databases that enable a new understanding of how legal and regulatory systems impact urban inequalities. These include a large-scale database of European housing case law, granular pricing and rent data for major cities, mortgage advertisement corpora in multiple languages, and a fully coded network of housing-related judicial decisions.

The team has conducted both doctrinal and quantitative studies on how courts have interpreted housing rights, how governments have regulated short-term rentals and access to credit, and how urban legal regimes interact with market dynamics. One line of work has reconstructed the legal history of public housing systems, while another investigates how constitutional and supranational courts have shifted their interpretation of property and housing protections over time.

Alongside these legal analyses, the team has applied statistical and computational methods such as difference-in-differences models, hedonic pricing, spatial clustering, topic modelling, and experimental surveys with legal professionals. These approaches are designed to assess how specific legal changes may have unintended distributive effects and how institutional actors frame and justify decisions affecting urban life.

The work performed has led to a wide range of preliminary findings, many of which are being prepared for publication or further testing. Internal methodological exchange within the team has been intense, fostering interdisciplinary learning across legal theory, applied econometrics, and data science.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

HABITAT has significantly advanced our understanding of how urban inequalities are shaped by legal and institutional frameworks. In some areas, results have contradicted expectations. For instance, a long-range network analysis of European housing case law revealed that the Lisbon Treaty, widely thought to have transformed legal integration in this field, did not significantly affect the structure of housing-related precedents—at least not within the ten-year span analysed.

Quantitative studies of short-term rental regulation in major cities suggest that restrictions on rental days may have had limited effect on prices but led to a higher concentration of properties among professionalised actors. This points to an unintended outcome: the financialisation of short-term rentals may be reinforced rather than curbed by current regulation, exacerbating housing exclusion.

Analyses of constitutional and human rights jurisprudence over the past five decades show a general weakening of doctrines tied to the “social function” of property. Courts have increasingly protected individual ownership over redistributive housing measures, often invalidating rent control schemes and weakening tenants’ rights.

Additional studies suggest that judicial decisions and urban governance networks may be shaped by national-majority dynamics, revealing subtle patterns of bias in transnational or multilevel legal contexts.

Finally, preliminary textual analyses of green mortgage advertisements show that consumers may be nudged toward choosing these products through positive framing and sentiment, despite stricter access conditions. This raises new questions about fairness and transparency in credit allocation.

Overall, the project has contributed novel data, methods, and concepts for understanding the role of law in the reproduction of urban inequalities, setting the stage for more evidence-based legal and policy interventions.