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Do Low Income Housing Subsidies Increase Housing Consumption?

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  • Todd Sinai
  • Joel Waldfogel

Abstract

A necessary condition for justifying a policy such as publicly provided or subsidized low- income housing is that it has a real effect on recipients’ outcomes. In this paper, we examine one aspect of the real effect of public or subsidized housing -- does it increase the housing stock? If subsidized housing raises the quantity of occupied housing per capita, either more people are finding housing or they are being housed less densely. On the other hand, if public or subsidized housing merely crowds out equivalent-quality low-income housing that otherwise would have been provided by the private sector, the housing policy may have little real effect on housing consumption. Using Census place-level data from the decennial census and from the Department of Housing and Urban Development, we ask whether places with more public and subsidized housing also have more total housing, after accounting for housing demand. We find that government-financed units raise the total number of units in a Census place, although on average three government-subsidized units displace two units that would otherwise have been provided by the private market. There is less crowd out in more populous markets, and more crowd out in places where there is less excess demand for public housing, as measured by the number of government-financed units per eligible person. Tenant-based housing programs, such as Section 8 Certificates and Vouchers, seem to be more effective than project-based programs at targeting subsidized housing units to people who otherwise would not have their own.

Suggested Citation

  • Todd Sinai & Joel Waldfogel, "undated". "Do Low Income Housing Subsidies Increase Housing Consumption?," Zell/Lurie Center Working Papers 394, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
  • Handle: RePEc:wop:pennzl:394
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    References listed on IDEAS

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    Cited by:

    1. Gibbons, Stephen & Manning, Alan, 2006. "The incidence of UK housing benefit: Evidence from the 1990s reforms," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 799-822, May.
    2. Lee, Chul-In, 2007. "Does provision of public rental housing crowd out private housing investment? A panel VAR approach," Journal of Housing Economics, Elsevier, vol. 16(1), pages 1-20, March.
    3. Malpezzi, Stephen & Vandell, Kerry, 2002. "Does the low-income housing tax credit increase the supply of housing?," Journal of Housing Economics, Elsevier, vol. 11(4), pages 360-380, December.
    4. Le Blanc, David, 2005. "Economic evaluation of housing subsidy systems: a methodology with application to Morocco," Policy Research Working Paper Series 3529, The World Bank.
    5. Janet Currie & Firouz Gahvari, 2008. "Transfers in Cash and In-Kind: Theory Meets the Data," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 333-383, June.
    6. O'Flaherty, Brendan & Wu, Ting, 2006. "Fewer subsidized exits and a recession: How New York City's family homeless shelter population became immense," Journal of Housing Economics, Elsevier, vol. 15(2), pages 99-125, June.
    7. 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.

    More about this item

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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