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Effects of prevailing wage requirements on the cost of low-income housing

  • Sarah Dunn
  • John M. Quigley
  • Larry A. Rosenthal

Recent California legislation extends the application of prevailing wage regulations to subsidized low-income residential construction projects. Econometric evidence based on micro data covering 205 low-income housing projects subsidized by the California Tax Credit Allocation Commission in 1997-2002 demonstrates that construction costs increased substantially under prevailing wage requirements. Estimates of additional construction costs in the authors' most extensive models range from 9% to 37%. The analysis controls for variations in cost by geographical location and for differences in project characteristics, financing, and developer attributes. The authors estimate the effect of uniform imposition of these regulations on the number of new dwellings for low-income households produced under the tax credit program in California. Under reasonable assumptions, the mid-range estimate of the prospective decrease exceeds 3,100 units per year. (Free full-text download available at

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Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 59 (2005)
Issue (Month): 1 (October)
Pages: 141-157

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Handle: RePEc:ilr:articl:v:59:y:2005:i:1:p:141-157
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