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Do Low Income Housing Subsidies Increase Housing Consumption?

  • Todd Sinai
  • Joel Waldfogel

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.

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Paper provided by Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania in its series Zell/Lurie Center Working Papers with number 394.

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Handle: RePEc:wop:pennzl:394
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  1. Reeder, William J., 1985. "The benefits and costs of the section 8 existing housing program," Journal of Public Economics, Elsevier, vol. 26(3), pages 349-377, April.
  2. Steven T. Berry & Joel Waldfogel, 1997. "Public Radio in the United States: Does It Correct Market Failure or Cannibalize Commercial Stations?," NBER Working Papers 6057, 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. Painter, Gary, 1997. "Does Variation in Public Housing Waiting Lists Induce Intra-Urban Mobility?," Journal of Housing Economics, Elsevier, vol. 6(3), pages 248-276, September.
  5. Lawrence F. Katz & Jeffrey R. Kling & Jeffrey B. Liebman, 2000. "Moving to Opportunity in Boston: Early Results of a Randomized Mobility Experiment," NBER Working Papers 7973, National Bureau of Economic Research, Inc.
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  7. Cutler, David M & Gruber, Jonathan, 1996. "Does Public Insurance Crowd Out Private Insurance?," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 391-430, May.
  8. Currie, Janet & Yelowitz, Aaron, 2000. "Are public housing projects good for kids?," Journal of Public Economics, Elsevier, vol. 75(1), pages 99-124, January.
  9. Olsen, Edgar O. & Barton, David M., 1983. "The benefits and costs of public housing in New York City," Journal of Public Economics, Elsevier, vol. 20(3), pages 299-332, April.
  10. James M. Poterba, 1994. "Public Policy and Housing in the United States," NBER Chapters, in: Housing Markets in the United States and Japan, pages 239-256 National Bureau of Economic Research, Inc.
  11. Edgar O. Olsen, 2000. "The Cost-Effectiveness of Alternative Methods of Delivering Housing Subsidies," Virginia Economics Online Papers 351, University of Virginia, Department of Economics.
  12. Quigley, John M., 2002. "A Decent Home: Housing Policy in Perspective," Berkeley Program on Housing and Urban Policy, Working Paper Series qt8f57x42q, Berkeley Program on Housing and Urban Policy.
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