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Economic incentives, housing allowance, and housing consumption: An unintended consequence of a shift in housing policy

  • Enström Öst, Cecilia
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    This study investigated whether an imposed dwelling size constraint in the Swedish housing allowance system induced recipients to move into smaller apartments and overcrowded conditions, i.e., an unintended consequence of a housing policy shift. To address this matter, this paper exploits a quasi-experimental dimension of the imposed dwelling size limit by applying the difference-in-difference estimator. Data for this study were extracted from the Swedish National Insurance Board’s database on housing allowance recipients, which comprises data previously unavailable for research. The estimation results suggest that this policy shift induced single-parent households living in rental housing to decrease their consumption of interior space, yielding a statistically significant increase in moves into overcrowded conditions, an effect that is even greater for single parents with one child than for those with two or more children. This effect runs directly counter to two long-term stated goals of the Swedish housing allowance system: (1) to induce households to move into better housing, thereby increasing their housing consumption, and (2) to prevent families with children from living in overcrowded conditions.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1051137713000570
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    Article provided by Elsevier in its journal Journal of Housing Economics.

    Volume (Year): 23 (2014)
    Issue (Month): C ()
    Pages: 17-27

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    Handle: RePEc:eee:jhouse:v:23:y:2014:i:c:p:17-27
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622881

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    1. Harvey S. Rosen, 1981. "Housing Behavior and the Experimental Housing Allowance Program: What Have We Learned?," NBER Working Papers 0657, National Bureau of Economic Research, Inc.
    2. Emmanuel Saez, 1999. "Do Taxpayers Bunch at Kink Points?," NBER Working Papers 7366, National Bureau of Economic Research, Inc.
    3. Edgar O. Olsen, 2003. "Housing Programs for Low-Income Households," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 365-442 National Bureau of Economic Research, Inc.
    4. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    5. Bruce D. Meyer, 1994. "Natural and Quasi- Experiments in Economics," NBER Technical Working Papers 0170, National Bureau of Economic Research, Inc.
    6. Bruce D. Meyer, 1988. "Unemployment Insurance And Unemployment Spells," NBER Working Papers 2546, National Bureau of Economic Research, Inc.
    7. Fallis, George, 1990. "The optimal design of housing allowances," Journal of Urban Economics, Elsevier, vol. 27(3), pages 381-397, May.
    8. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 1-19.
    9. Shroder, Mark, 2002. "Does housing assistance perversely affect self-sufficiency? A review essay," Journal of Housing Economics, Elsevier, vol. 11(4), pages 381-417, December.
    10. Bhat, Chandra R., 1996. "A hazard-based duration model of shopping activity with nonparametric baseline specification and nonparametric control for unobserved heterogeneity," Transportation Research Part B: Methodological, Elsevier, vol. 30(3), pages 189-207, June.
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