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Public Housing Units vs. Housing Vouchers: Accessibility, Local Public Goods, and Welfare

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Author Info

  • Charles Ka Yui Leung

    (City University of Hong Kong)

  • Sinan Sarpca

    (Koc University)

  • Kuzey Yilmaz

    (University of Rochester)

Abstract

We develop a general equilibrium model of residential choice and study the effects of two housing aid policies, public housing units and housing vouchers. Land is differentiated by both residential accessibility and local public goods, and the provision levels of local public goods are determined by property tax revenues and neighborhood compositions. Households differ in their incomes and preferences for local public goods. Housing aid policies are financed by general income taxes. We discuss how the location of public housing units is a fundamental policy variable, in addition to the numbers and sizes of units, and argue that vouchers not only cause less distortion for social welfare compared to public housing, but may also improve overall welfare.

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File URL: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_574.pdf
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Bibliographic Info

Paper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 574.

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Length: 38 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:roc:rocher:574

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Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.

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Keywords: Public housing; housing vouchers; housing policy; welfare; residential location choice; local public goods; endogenous sorting;

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References

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  1. Eric Hanushek & Kuzey Yilmaz, 2010. "Household Location and Schools in Metropolitan Areas with Heterogeneous Suburbs: Tiebout, Alonso, and Government Policy," Discussion Papers 09-012, Stanford Institute for Economic Policy Research.
  2. Hugo Priemus, 2000. "Rent Subsidies in the USA and Housing Allowances in The Netherlands: Worlds Apart," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 24(3), pages 700-712, 09.
  3. Edward L. Glaeser & Matthew E. Kahn & Jordan Rappaport, 2000. "Why Do The Poor Live In Cities?," Harvard Institute of Economic Research Working Papers 1891, Harvard - Institute of Economic Research.
  4. Fernandez, Raquel & Rogerson, Richard, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 135-64, February.
  5. Kath Hulse & Bill Randolph, 2005. "Workforce Disincentive Effects of Housing Allowances and Public Housing for Low Income Households in Australia," European Journal of Housing Policy, Taylor and Francis Journals, vol. 5(2), pages 147-165, August.
  6. Ellickson, Bryan, 1971. "Jurisdictional Fragmentation and Residential Choice," American Economic Review, American Economic Association, vol. 61(2), pages 334-39, May.
  7. Edgar O. Olsen, 2001. "Housing Programs for Low-Income Households," NBER Working Papers 8208, National Bureau of Economic Research, Inc.
  8. Smeeding, Timothy M, et al, 1993. "Poverty, Inequality, and Family Living Standards Impacts across Seven Nations: The Effect of Noncash Subsidies for Health, Education and Housing," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(3), pages 229-56, September.
  9. Bingley, Paul & Walker, Ian, 2001. "Housing Subsidies and Work Incentives in Great Britain," Economic Journal, Royal Economic Society, vol. 111(471), pages C86-103, May.
  10. Charles A. M. de Bartolome & Stephen L. Ross, 2002. "Equilibria with Local Governments and Commuting: Income Sorting vs. Income Mixing," Working papers 2002-01, University of Connecticut, Department of Economics, revised Mar 2003.
  11. Nechyba, Thomas J, 1999. " School Finance Induced Migration and Stratification Patterns: The Impact of Private School Vouchers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 5-50.
  12. Hanushek Eric A & Sarpça Sinan & Yilmaz Kuzey, 2011. "Private Schools and Residential Choices: Accessibility, Mobility, and Welfare," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-34, August.
  13. Thomas J. Nechyba, 2000. "Mobility, Targeting, and Private-School Vouchers," American Economic Review, American Economic Association, vol. 90(1), pages 130-146, March.
  14. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  15. Hanushek, Eric & Yilmaz, Kuzey, 2007. "The complementarity of Tiebout and Alonso," Journal of Housing Economics, Elsevier, vol. 16(2), pages 243-261, June.
  16. Epple, Dennis & Filimon, Radu & Romer, Thomas, 1993. "Existence of voting and housing equilibrium in a system of communities with property taxes," Regional Science and Urban Economics, Elsevier, vol. 23(5), pages 585-610, November.
  17. Sacerdote, Bruce, 2011. "Peer Effects in Education: How Might They Work, How Big Are They and How Much Do We Know Thus Far?," Handbook of the Economics of Education, Elsevier.
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Citations

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Cited by:
  1. Benoît Schmutz, 2012. "Public Housing Quotas and Segregation," Working Papers halshs-00793467, HAL.
  2. Leung, Tin Cheuk & Tsang, Kwok Ping, 2012. "Love thy neighbor: Income distribution and housing preferences," Journal of Housing Economics, Elsevier, vol. 21(4), pages 322-335.
  3. Reina, Vincent & Begley, Jaclene, 2014. "Will they stay or will they go: Predicting subsidized housing opt-outs," Journal of Housing Economics, Elsevier, vol. 23(C), pages 1-16.

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