Determinants of tenure choice in the third world: An empirical study of Cairo and Manila

Abstract

This paper examines the determinants of tenure choice in two cities of the Third World. Empirical analyses of the factors that motivate a particular household to become a tenant, squatter, or legal owner can shed light on the types of strategies that are most likely to affect tenure choice. A relatively straightforward application of a logit model is used to analyze tenure choice in both cities. In each case, households are assumed to maximize utility subject to a budget constraint for rental, squatting, and owning modes of tenure. The model predicts tenure choice correctly 63% of the time for Manila households and 77% of the time for Cairo residents. The findings also suggest that squatter households may have more in common with owners than renters, especially in terms of mobility considerations.