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Offsetting the Earnings Disincentive in Public Housing: Evidence from a Behaviorally Informed Field Intervention

Author

Listed:
  • Dykstra, Holly

    (University of Konstanz)

  • Fernández Guerrico, Sofía

    (University of Konstanz)

Abstract

Income-based rents in public housing create an earnings disincentive. We collaborate with a public housing authority to design a behaviorally informed program that returns part of the rent induced by higher earnings to residents. Importantly, the program automatically enrolled households and was explicitly designed to make the increased payoff to working salient. Using a difference-in-differences approach, we estimate that annual household-head earnings rise 17% ($1,370/year) and public assistance falls 7.5%, with impacts on both intensive and extensive margins. These results provide evidence that an in-work benefit designed for salience can offset the earnings disincentive and affect follow-through labor market behavior.

Suggested Citation

  • Dykstra, Holly & Fernández Guerrico, Sofía, 2026. "Offsetting the Earnings Disincentive in Public Housing: Evidence from a Behaviorally Informed Field Intervention," IZA Discussion Papers 18483, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18483
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    Keywords

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    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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