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Housing Policy Impacts on Poverty and Inequality in Europe

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  • Guillaume Bérard
  • Alain Trannoy

Abstract

Developed countries have addressed the challenge of improving low‐income households' housing conditions through housing allowances and social housing. In this paper, we assess the effectiveness of these policies—individually and in combination—by comparing them to a counterfactual scenario without housing support. We examine 27 European countries using harmonized data from the EU‐SILC dataset. We find that (1) cash housing benefits (housing allowances) are more cost‐effective than in‐kind housing benefits (social housing), and more effective at reducing poverty than inequality. This result holds even when accounting for a partial capture of cash housing benefits by landlords, as documented in several studies. (2) Some Nordic and Western countries—especially Finland—achieve an impressive reduction in both inequality and poverty (one‐third) while spending as much as France and the UK. By contrast, France's mixed approach, combining both policies, appears to be the least cost‐effective.

Suggested Citation

  • Guillaume Bérard & Alain Trannoy, 2025. "Housing Policy Impacts on Poverty and Inequality in Europe," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 71(3), August.
    • Handle: RePEc:bla:revinw:v:71:y:2025:i:3:n:e70028
    DOI: 10.1111/roiw.70028
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    References listed on IDEAS

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    1. David Albouy & Gabriel Ehrlich & Yingyi Liu, 2016. "Housing Demand, Cost-of-Living Inequality, and the Affordability Crisis," NBER Working Papers 22816, National Bureau of Economic Research, Inc.
    2. Brewer, Mike & Browne, James & Emmerson, Carl & Hood, Andrew & Joyce, Robert, 2019. "The curious incidence of rent subsidies: Evidence of heterogeneity from administrative data," Journal of Urban Economics, Elsevier, vol. 114(C).
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    4. Michael D. Eriksen & Amanda Ross, 2015. "Housing Vouchers and the Price of Rental Housing," American Economic Journal: Economic Policy, American Economic Association, vol. 7(3), pages 154-176, August.
    5. Fack, Gabrielle, 2006. "Are housing benefit an effective way to redistribute income? Evidence from a natural experiment in France," Labour Economics, Elsevier, vol. 13(6), pages 747-771, December.
    6. Robert Collinson & Peter Ganong, 2018. "How Do Changes in Housing Voucher Design Affect Rent and Neighborhood Quality?," American Economic Journal: Economic Policy, American Economic Association, vol. 10(2), pages 62-89, May.
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    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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