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The Economics of Homelessness: The Evidence from North America

  • Quigley, John M.
  • Raphael, Steven

It is generally believed that the increased incidence of homelessness in the US has arisen from broad societal factors – changes in the institutionalization of the mentally ill, increases in drug addiction and alcohol usage, etc. This paper reports on a comprehensive test of the alternate hypothesis that variations in homelessness arise from changed circumstances in the housing market and in the income distribution. We utilize essentially all the systematic information available on homelessness in US urban areas – census counts, shelter bed counts, records of transfer payments, and administrative agency estimates. We use these data to estimate the effects of housing prices, vacancies, and rent-to-income ratios upon the incidence of homelessness. Our results suggest that simple economic principles governing the availability and pricing of housing and the growth in demand for the lowest quality housing explain a large portion of the variation in homelessness among US metropolitan housing markets. Furthermore, rather modest improvements in the affordability of rental housing or its availability can substantially reduce the incidence of homelessness in the US.

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Paper provided by Berkeley Program on Housing and Urban Policy in its series Berkeley Program on Housing and Urban Policy, Working Paper Series with number qt2dw8b4r3.

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Date of creation: 23 Oct 2002
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Handle: RePEc:cdl:bphupl:qt2dw8b4r3
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  1. Steven D. Levitt, 1995. "The Effect of Prison Population Size on Crime Rates: Evidence From Prison Overcrowding Litigation," NBER Working Papers 5119, National Bureau of Economic Research, Inc.
  2. Quigley, John M. & Raphael, Steven & Smolensky, Eugene, 2002. "Homeless in America, Homeless in California," Berkeley Program on Housing and Urban Policy, Working Paper Series qt4v61c0ws, Berkeley Program on Housing and Urban Policy.
  3. Honig, Marjorie & Filer, Randall K, 1993. "Causes of Intercity Variation in Homelessness," American Economic Review, American Economic Association, vol. 83(1), pages 248-55, March.
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